THE SOCIAL 
COMMONWEALTH 




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THE SOCIAL COMMONWEALTH 



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THE SOCIAL COMMONWEALTH. 
(A Plan for Achieving Industrial Democracy) 



By 
Bernard A. Rosenblatt 

u 



Lincoln Publishing Corporation 

New York 

1914. 



IRS43 



Copyright 1914 by 

Lincoln Publishing Corporation 

All rights reserved. 



SEP 30 1914 

©CI.A380637 



DEDICATED TO 

LOUIS D. BRANDEIS 

A LEADER OF THE PEOPLE 

IN THE 

BATTLE FOR SOCIAL JUSTICE. 



CONTENTS 
Preface n 

Part I — The Labor Commonwealth-. 

Chapter I — Free Land and Free Labor 17 

Chapter II — Scientific Management and the 
Distribution of Wealth 25 

Chapter III — Unemployment and the Minimum 
Wage 33 

Chapter IV — The Labor Commonwealth 39 

Chapter V — Insurance Against Unemployment 53 

Chapter VI — Social Limitations of Competition 63 

Part II — The Industrial Commonwealth. 

Chapter VII — Individual Liberty and State In- 
terference .' 77 

Chapter VIII — Socialism and the Economic 
Surplus 93 

Chapter IX— The Single Tax and the Popula- 
tion Value of Land 113 

Chapter X — The Industrial Commonwealth . . . 143 

Chapter XI — A Social Program and a Political 
Platform 171 



PREFACE. 

The inductive method is now such an important fac- 
tor in all scientific work, that it has become fashionable 
to regard with contempt any discussion in economics 
and politics that is not based on elaborate statistics and 
the citation of numerous individual cases. The author 
yields to no one in his high regard for the valuable 
work of painstaking scholars, who have given us im- 
portant scientific laws, based upon many years of re- 
search work in the laboratory. And yet, our point of 
view has been perverted by an exclusive adherence to 
the forms of inductive reasoning — we have so accus- 
tomed ourselves to scrutinize the individual trees that 
we lose ourselves in a dense forest of economic and po- 
litical life. Without disregarding the inductive method, 
this book is an attempt to free our minds from a cita- 
tion of instances until the general principles are ob- 
scured in a maze of figures and "repeated observations." 

We are concerned here with basic considerations, 
with fundamental analyses, and not with extended ar- 
guments and long-drawn-out "proofs" for theories that 
another inductive scholar will tear to shreds within a 
decade. We are told that the great jurist, Chief-Jus- 
tice John Marshall, would often deliver the most mo- 
mentous decisions, relying solely on logic and the gen- 
eral principles of law for the support of his judgments, 

with the remark that "Mr. Justice will 

furnish the citation of cases and precedents." It is time 
that we inject in our discussions in political science 
some of the spirit of the "Expounder of the American 
Constitution." We can leave to others, and perhaps to 
persons better qualified for that purpose, a careful pres- 



12 THE SOCIAL COMMONWEALTH. 

entation of all facts necessary to the full scientific justi- 
fication of all the conclusions reached in this treatise. 
Let us be satisfied with having awakened sufficient in- 
terest to make these conclusions the subject of practical 
political discussion, and we may be sure that enough 
scholars will be found to agree with our views and to 
expound the philosophy of our "Industrial Democ- 
racy." 

The author will be fully compensated for his labor if 
this book will enable us to adopt a new point of view in 
economic problems — a new method for achieving 
"social justice." For, after all, the point of view and 
the method are of primary importance, while sugges- 
tions for isolated reforms are secondary, in any com- 
prehensive program for social readjustment. 

Let this small volume be viewed, therefore, as the 
presentation of a method for achieving industrial lib- 
erty step by step, even as society prepares itself for 
each ascent on the ladder of progress. Without en- 
dorsing any pet theories, or tacitly accepting any brand 
of political philosophy, we shall endeavor to fix the true 
relation between competition and co-operation in eco- 
nomic life, and to show how far, and in what manner, 
both of these forces can be made to> serve in the creation 
of the Social Commonwealth. We shall define a Social 
Commonzvealth as a group in which the individual is 
assured of the necessities of life and the community is 
enabled to secure an economic surplus that nitty be\ 
utilized for social progress and a better communal life. 

I take full responsibility for the views herein pre- 
sented as well as for the method of treatment. And 
yet, I feel that a few words of grateful acknowledge- 
ment are due my faithful friends who have inspired 
what may be of value in my work and aided me in the 



PREFACE 13 

difficult task of criticism. First and foremost, my re- 
spected teacher in Social Science, Professor Franklin H. 
Giddings of Columbia University, deserves particular 
mention, for he has strengthened my opposition to 
social injustice, and has filled me with a desire for 
handling fundamentals, rather than details, principles 
rather than individual cases. To Professors Henry R. 
Seager, Samuel McCune Lindsay, Joel E. Spingarn 
and Dr. E. Stagg Whitin, I owe many thanks for 
suggestions based upon the reading of large portions 
of the manuscript. Finally, I owe more than words 
can express to my friend, Max J. Herzberg, of the 
Department of English of the Newark High School, 
and to my brother, William Rosenblatt, for numerous 
suggestions, and the painstaking reading of proofs. 
New York City, January 5th, 19 14. 

Bernard A. Rosenblatt. 



PART I. 
THE LABOR COMMONWEALTH. 
(A Plan for Insurance Against Unemployment) 



CHAPTER I 
Free Land and Free Labor. 

Students of Economics assure us that we have an 
immense country capable of supporting many times the 
inhabitants of present-day America. Visitors from 
Europe marvel at the large tracts of undeveloped agri- 
cultural soil, and are amazed that Americans, who are 
deemed the most progressive of nations, allow fertile 
lands, in the West and South, yes, even in the East, at 
the very threshold of our large cities, to remain idle or 
only partially developed by old-fashioned methods. 

This country has opportunities for industrial expan- 
sion and promotion of the material welfare of its inhab- 
itants unequalled by any other nation on earth. We are 
the heirs to an estate of incalculable value, and we 
would prove unfaithful to our trust if we should permit 
fertile lands (like the rich agricultural soil of the 
Mississippi Valley) to lie unused, while poverty op- 
presses our countrymen and unemployment strikes 
terror into the hearts of our wage-earners. 

The truth is that in the West and South and in some 
portions of the East we have a land without a people, 
while in the congested cities of our sea-coast we have 
a people without a land. If we could but unite the two 
— bring the "jobless'' man to mother earth and let him 
earn his living by 'the sweat of his brow — we would 
automatically solve the problem of unemployment. 

In the early period of American history, the unem- 
ployed, by moving to the unexplored fields of the West, 
constituted themselves into small self-sufficient eco- 
nomic units — and, thereby, effectively regulated the 
labor market. Our manufacturing establishments and 



18 THE SOCIAL COMMONWEALTH, 

our commercial enterprises before 1880 had to compete 
with the open fields of the West in securing their supply 
of labor. As a result, this free land not only solved 
the problem of the unemployed, but also secured the 
establishment of a relatively high standard of living 
and the "American wage" corresponding thereto. The 
free lands of the West automatically fixed a rough 
minimum wage for labor by placing a limit below 
which the wage-earner would prefer to work as a 
squatter or free-settler in the unoccupied country of the 
West. 

But we are now rapidly appropriating all the avail- 
able lands, and we will soon be face to face with the 
problem not only of unemployment but also of a "living 
wage" for the laborer. Can we find an adequate sub- 
stitute to-day to take the place of the free lands of the 
West for the solution of the problem of unemployment 
and a minimum wage? Unless we discover such an 
effective method in the near future, we shall have to 
face a condition which is the breeder of revolutions 
and atrocities — when able-bodied and willing workers 
would be starving because of the lack of opportunities 
for work. 

It is not our purpose here to enter into a discussion 
of the extent of unemployment. It is sufficient for us 
to grasp this important fact : on the one hand, we have 
many thousands of honest and loyal citizens ready and 
willing to work, but deprived of the opportunity of 
earning their living because they have no control over 
the land or machinery necessary for production ; while, 
on the other hand, fields capable of producing a large 
food supply and capital (in the form, of machinery and 
tools) lie unused because it is "unprofitable" to work 
them. 



FREE LAND AND FREE LABOR 19 

The investigations of Charles Booth among the poor 
of London show that about 30% of the population arc 
constantly in poverty, i. e., in a condition in which they 
do not earn sufficient for the maintenance of physical 
well-being. Rowntree, after a careful study of the 
conditions in York, England, estimates the proportion 
of those in poverty as 27.84% — somewhat less than the 
London average. He concludes that "we are face to 
face with the startling probability that from 25% to 
30% of the town population of the United Kingdom 
are living in poverty." Robert Hunter, in "Poverty," 
states: "And yet from the facts of distress, as given, 
and from opinions formed, both as charity agent and as 
settlement worker, I should not be at all surprised if 
the number of those in poverty in New York, as weil as 
in other large cities and industrial centres, rarely fell 
below 25% of all the people." The same writer offers 
a vivid picture which connects the problem of poverty 
with the danger underlying our whole competitive sys- 
tem — the problem of unemployment. In "Poverty" 
(on page 295), he says : 

"The tragedy which results from this surplus of 
labor was strikingly shown in the work of a sculptor, 
exhibited at the World's Fair in Chicago. It is the 
custom in some places, in England for instance, for the 
foremen of the great factories to go out in the morning 
to the gate where the workmen, seeking employment, 
are gathered, and to throw out tickets to the number of 
employees needed. The group represents an intense 
struggle to obtain one of these tickets. The man for- 
tunate enough to get it is the central figure. He holds 
it high above his head, resistant, but looks with com- 
passion upon the struggling ones about him. A with- 
ered old man clings to him, begging for the ticket; a 



20 THE SOCIAL COMMONWEALTH. 

youth behind is plotting to seize it; a woman with babe 
in arms, trampled under the feet of the others, strives 
to protect the child; a tiny lad, with a wolfish hunger 
in his face, endeavors to clamber tip on others in the 
hope of seizing the ticket. Let him, who will, go about 
the factory districts of the country and see this thing 
enacted in real life, not so obviously dramatical but 
with agony that is actual." 

Many economists agree with Charles Booth that 
"our modern system of industry will not work without 
some unemployed margin, some reserve of labor," and 
another economist has declared that "for long periods of 
time large stagnant pools of adult effective labor power 
must lie rotting in the bodies of their owners, unable tG 
become productive of any form of wealth, because they 
cannot get access to the material of production," and 
"facing them in equal idleness are unemployed or 
under-employed masses of land and capital, mills, 
mines, etc., which taken in conjunction with labor pow- 
er, are theoretically competent to produce wealth for 
the satisfaction of human wants." John Hobson de- 
livers this strong plea for the unemployed : "Modern 
life has no more tragical figure than the gaunt, hungry 
laborer wandering about the crowded centres of indus- 
try and wealth, begging in vain for permission to share 
in that industry, and to contribute to that wealth; ask- 
ing in return not the comforts and luxuries of civilized 
life, but the rough food and shelter for himself and 
family, which would be practically secured to him in 
the rudest form of savage society." Is our competi- 
tive system of industry inseparable from a condition of 
degrading unemployment coupled with the waste of 
natural resources, which, if utilized, might eliminate 
unemployment and solve the problem of poverty? 



FREE LAND AXD FREE LABOR 21 

The ancient Hebrews had one peculiar institution 
which might serve as a valuable lesson for us to-day. 
The old tribal feeling was so strong among them that 
the murder of a kinsman had to be avenged by his com- 
rades, even though the dead man may have been killed 
accidentally. In order to mitigate the hardships of 
this tribal custom — common to many and diverse peo- 
ples — "cities of refuge" were provided by Hebraic Law 
to which any man who was free from the taint of crim- 
inal wrong-doing might flee for safety, and escape the 
revenge of the victim's kinsmen. The men charged 
with homicide, but guiltless of any murderous inten- 
tions, would remain as "voluntary prisoners" in these 
cities of refuge. 

To-day, we discard annually thousands of men from 
the fields of industry and labor, and cast them into the 
slums reserved for the so-called "unfit." Is it possible 
for us to construct new "Cities of Refuge" for those 
thousands of honest workers who do not find a place 
in our cumbersome economic system? Industry has 
often taken from these men their vitality and earning 
power, as their contribution to the world's progress, 
before they were assigned to the scrap-heap of civiliza- 
tion. Can w r e offer them some haven of safety where 
they may earn at least sufficient to* support life? Can 
our industrial system offer them new cities of refuge 
where the harsh competitive system cannot overtake 
them — where they will not be forced to pay the pen- 
alty of poverty for the crime of unemployment? 

In the olden days, religion stepped in and saved the 
innocent from the barbarism of tribal life. To-day, 
conditions demand that we create some institution, 
whether religious, political or economic, to protect the 
guiltless from the ravages of a harsh competitive sys- 



22 THE SOCIAL COMMONWEALTH, 

tem of industry. We need such an institution not so 
much for the unfortunates who have been rejected by 
modern industry. Their lives are hard, but conditions 
tend to make that life short, and they pass rapidly from 
the world stage. It is not to the charitable feelings of 
mankind that we ought to appeal for the relief of those 
who have been crippled in the merciless industrial bat- 
tle, for they have earned their rewards as honestly as 
pensioned veterans of old wars. It is not, primarily, 
for the sake of the unemployed that we should create 
an institution which would eliminate unemployment. 
But if we find that their condition is bound up with the 
welfare of a large mass of human beings, that their suf- 
ferings tend to force down the standard of living of all 
and pull down the level of the whole economic struggle 
for existence, then, indeed, the problem of the unem- 
ployed becomes the problem of our whole civilization. 

Just so long as we have a large class of men who are 
forced into the ranks of the unemployed, without the 
opportunity of earning a decent livelihood, so long will 
they act as a handicap on our industrial system. Hav- 
ing been dismissed from the regular industrial army, 
they become the scum of the labor market, accepting 
the lowest wages sufficient to hold body and soul to- 
gether. By their unwholesome competition with the 
more reliable labor force, they tend to force down the 
wages of all. The mere presence, in the industrial mar- 
ket, of a large class of "jobless" men, who must, some- 
how, find food, clothing and shelter, is a destructive 
force that operates to reduce the wages of all. 

In short, enlightened self-interest, rather than any 
charitable considerations, should lead us to devise some 
method for eliminating unemployment. Let us create 
"Cities of Refuge for the Unemployed/' and we take the 



FREE LAND AND FREE LABOR 23 

most important step in establishing a minimum wage, 
below which none will compete in the industrial strug- 
gle. We establish a proper standard of living that shall 
be self -regulative, and install an automatic safety de- 
vice to protect the citizen-body from the unhealthful 
competition of the "unfit" Accordingly, by protecting 
the unemployed from the uncertainties of our compet- 
itive system of industry, we unite the considerations of 
idealism, for the welfare of the poor and the oppressed, 
with self-interest for safeguarding our economic sys- 
tem. Such a unified force working for progress is irre- 
sistible, for to the charitable instincts of mankind are 
added the more potent agencies of self-defense. 

A scholastic philosopher of the Mediaeval Church 
might have made some important deductions from cer- 
tain acts of Jehovah as recorded in the Old Testament. 
When the children of Israel went forth from Egypt, 
they wandered for forty years in the desert, supported 
directly from the bounty of the Lord. The All -Wise 
understood that a nation of slaves can be converted into 
freemen only after they have become independent of 
the tyranny of physical wants. 

In His beneficent wisdom, Ke sent them manna from 
the heavens to satisfy the craving for food, so that the 
chosen people might have leisure and the inclination to 
pursue higher things. God knew that the Exodus, in 
itself, did not convert slaves into freemen; that liberty 
means more than emancipation, than the mere negative 
process of breaking old chains. True liberty is a posi- 
tive concept: and only after the countrymen of Moses 
had been freed from the inexorable physical needs were 
they really free to follow the laws of the Almighty. 
From such facts, a Church philosopher might have 
justly concluded that the supreme function of govern- 



24 THE SOCIAL COMMONWEALTH, 

ment, as revealed to us through the works of God, 
should be to endeavor continually and persistently to 
provide for the physical wants of the citizens. Only 
after we have removed the despotism of physical needs 
can we succeed in building a higher self, a better and 
nobler type of man. With less strained reasoning, we 
of the Twentieth Century might agree with the con- 
clusion that government should be utilized as an in- 
strument for making man free in his industrial life as 
well as in his political life. 



CHAPTER II. 
Scientific Management and the Distribution of 

Wealth. 

i — Permanent Oversupply of Labor. 

An eminent economist has declared, with an appar- 
ent show of reason, that whatever faults we may attrib- 
ute to our present-day economic system, it has, at least, 
one redeeming feature — namely, "it works," while all 
socialistic schemes are mere dreams. But if the com- 
petitive system of industry works like a squeezing ma- 
chine that accumulates a by-product of a submerged 
tenth, interspersed with strikes, lockouts, ruinous trade- 
wars and political bribery, might we not expect even 
Socialism to prove, at least, equally beneficent? Any 
doctrine that a thing works because it exists would 
forestall progress, since existence is made synonymous 
with efficiency. Most grievous wrongs would be sanc- 
tioned because of their existence, and every upward 
step in civilization would be decreed "unworkable." 

Much has been written on the evils of an unregu- 
lated competition with the unnecessary duplication of 
plants, the consequent extra expense on useless adver- 
tisements for attracting trade, and the waste due to 
the maladjustment of labor. But there is a far stronger 
indictment against the competitive system of industry 
than economic waste — than mere money loss. I refer 
to the waste of human life and the ceaseless grinding 
of the so-called "unfit." These unfit, who constitute 
the "submerged tenth" of civilization, while they hap- 
pen to be the unemployed and underpaid portion of the 
population under the present economic system, may 



26 THE SOCIAL COMMONWEALTH, 

not be the scum of the earth. Who knows how many 
an artist, scientist or thinker is lost to the world be- 
cause he is unfitted for the economic system of his day? 

Socrates was utterly useless for Athenian industry, 
and he would probably prove a failure in the modern 
economic world. Copernicus was so ill-fitted to the 
social system of his day that very effective means had to 
be employed to separate him from his environment. 
We must not be so hard on the "unfit" — for, after all, 
it means simply that a particular individual is unsuited 
for a particular industrial system in which he happens 
to occupy a certain unattractive position. 

Scientists tell us that even a machine of great effi- 
ciency will lose a large proportion in transforming one 
form of energy into another. Even so, it seems that 
our economic system, in spite of its boasted scientific 
achievements, allows an enormous amount of energy 
to dissipate. If we resolve this fact into terms of 
human life, it means that the hopes, aspirations and 
yearnings of countless human beings are crushed, and 
mankind is denied the benefits that their labor might 
bring. Furthermore, the increase in scientific knowl- 
edge and the multiplicity of inventions, while gener- 
ally raising the standard of living, have done very lit- 
tle to decrease the number of unemployed or alleviate 
the condition of the underpaid or "jobless" man. 

The numerous inventions and the application of sci- 
entific management in the industrial world, however 
beneficial and profitable for manufacturers and con- 
sumers alike, often aggravate the difficulties in the 
problem of unemployment. We cannot sanction the 
fallacy that an increase in output by individual em- 
ployees always means the loss of a job to some fellow 
wx>rkingman, for other employment, created by the 



SCIENTIFIC MANAGEMENT 27 

new wants of a progressive age, may be awaiting the 
discharged man. But the fact is that, because of mal- 
adjustments in our economic system, we are rapidly 
coming to a point when we shall have a permanent 
oversupply of labor — just as we now often have tem- 
porary overproduction (of materials). That this con- 
tention is not fallacious can be ascertained from a close 
examination of the tendency in economic activity at the 
present time. We have heard a great deal, not so long 
ago, about the numerous benefits secured by "scientific 
management." It has been heralded even as a new 
philosophy. Without attempting to disparage the 
good work of the pioneers in scientific methods of 
doing the world's work, let us remember that they 
concern themselves only with the problem of produc- 
tion. 

Like the economists of the old school, they neglect 
the problem of distribution, but without a proper dis- 
tribution even production itself can never be efficient. 

Do you question the truth of the last statement? 
Then analyze an analogous case, which is clearly in 
point. Let us examine the status of a definite com- 
munity of two thousand families that is economically 
self-sufficient and in which the theories of scientific 
management have triumphed and are rigidly applied. 
Of the two thousand able bodied workers, it is found 
that five hundred will suffice to furnish all the food 
necessary for the community, besides leaving a suf- 
ficiently large surplus; that another five hundred can 
do all the manufacturing demanded for a high standard 
of living; and that five hundred more are amply suf- 
ficient as teachers, artists, scientists and traders. In 
short, instead of two thousand workers, we find that 
fifteen hundred will be able to do all the necessary 



28 THE SOCIAL COMMONWEALTH. 

labor, including the production of a sufficiently large 
surplus. Now if the community should be a co-opera- 
tive commonwealth, it would find work for the remain- 
ing five hundred either in the accumulation of a larger 
economic surplus or in extraordinary work for beauti- 
fying the land and developing the artistic side of the 
inhabitants. But under a competitive system such an 
expenditure for the support of five hundred men, for 
labor that is not readily negotiable in profits, is un- 
thinkable. The state, the community or a mutual pro- 
tective association might undertake such a task, but 
any idealistic promoter who should be so unfortunate 
as to attempt it, under the competitive system of indus- 
try, would speedily be put out of business by his more 
thrifty competitors. In an industrial democracy, 
if three men out of every four can do all the work to 
supply the needs of four (with a sufficient economic 
surplus), the fourth man would be employed in some 
labor for the increase of the economic surplus or for 
the edification and enlightenment of the first three. 
But under the competitive system, the fourth man is 
discarded as a useless encumbrance on the economic 
fabric. Fortunately, the theories of scientific manage- 
ment have not yet taken deep root, so that instead of 
three men being able to do the work of four, it may 
take about nine men to do the work of ten. What do 
we do with the tenth man ? We send him to the recruit- 
ing station called the "submerged tenth" — the ground 
for volunteers in the service of vice and crime. This 
tenth man does manage to exist, somehow, thanks to 
the charities and philanthropies of the great and the 
ingenuity of the criminal class and the skill of the 
vicious. In the end, the community pays the bill for 
the support of the "submerged tenth," in some form or 



SCIENTIFIC MANAGEMENT 29 

another, as truly as if it offered pensions — with this 
immense difference : that instead of earning their liveli- 
hood by the sweat of their brows, these persons arc 
often induced to pay for their existence by^bartering 
their souls, by corrupting- their fellow- men, or by 
assuming the repellent attitude of the beggar. 

Furthermore, since the support of the submerged 
tenth is rendered precarious, they are of no conse- 
quence in the economic life of the nation. Living on 
the crumbs that fall from the well-filled table of civiliza- 
tion, they are not economic consumers and cannot be of 
much importance in estimates for production and in- 
dustry. 

On the contrary, they curtail production; instead of 
producing for ten-tenths of the population, we are 
producing only for nine-tenths because of the economic 
insignificance of the "submerged tenth"; and I make 
bold to say that if we institute a system of scientific 
management in which three men will do the work of 
four, without solving, at the same time, the problem of 
unemployment, we shall only have enlarged the under- 
world and transformed the "submerged tenth" into a 
"submerged fourth." Furthermore, production will 
have to be curtailed 25% instead of 10% to correspond 
with the decreased demand, because of the inability of 
one- fourth of the population to pay the price of a decent 
livelihood. 

It must not be forgotten, likewise, that every cur- 
tailment of production means a reduction in the number 
of wage-earners, who are added, automatically, to the 
unemployed class — demanding a still further decrease 
in production. 



30 THE SOCIAL COMMONWEALTH. 

2 — Surplus Labor Value and the Struggle for Markets 

The central feature of the Socialist program has been 
declared to be the principle that : Socialism demands 
for each worker the full value of his labor, whereas, 
under the competitive system a large surplus of his 
labor value is appropriated by capitalists in the form of 
rent, interest and profits. It is immaterial for us at 
this point whether we regard such appropriation as 
robbery (in conformity with the contention of Social- 
ists) or as the rewards of skill, abstinence and merit (as 
the defenders of the competitive system would have us 
believe), but the fact remains that there is a surplus 
value produced by each individual workingman which 
the latter does not consume — whether it be classified as 
profit or surplus labor value. The surplus may be one- 
half or one-tenth of the entire value of his produce, but 
that there is such an excess is indisputable. Science 
and proper management tend to increase this surplus, 
which might be of inestimable value to civilization and 
progress. It might be used to increase the comfort of 
the working class and to store up economic goods and 
capital for future generations. But under the competi- 
tive system of industry the most important function is 
the disposal, rather than the accumulation, of such sur- 
plus products — to increase consumption for the pur- 
pose of gathering larger profits. On the one hand our 
competitive system aims to reduce the expense of pro- 
duction, to eliminate useless laborers; while on the 
other hand it endeavors to increase consumption of the 
products so produced. What is the result? A large 
part of the population — the unemployed — have not the 
money equivalent for purchasing the goods that are so 
well advertised. Our haphazard competition, failing to 



SCIENTIFIC MANAGEMENT 31 

make any proper connection between demand and sup- 
ply, endeavors to produce as much as possible as cheaply 
as possible, without giving due heed to fostering a class 
of consumers. Accordingly, we have unemployment 
and low wages going hand in hand with overproduction 
and panics. 

We may now understand the significance of the 
enormous trade struggles of recent history. Free trade, 
protection, reciprocity, the open door policy (as in 
China ) and the "most favored nation" clauses are not 
mere shibboleths for political parties. They represent 
the feelings and convictions — the full portent of which 
is appreciated less by the masses than by the masters 
in finance — that we must have an outlet for surplus 
products or the nation will choke to death with a sur- 
plus of products which cannot be consumed in domestic 
commerce, because the vast masses of unemployed and 
underpaid have not the necessary money equivalent. So 
long as three-fourths or four-fifths of the nation can 
supply the needs of the entire nation, we must have this 
economic struggle for foreign markets as an outlet for 
surplus goods — at least so long as we maintain the pres- 
ent economic system of competition for profit. Let that 
foreign market fail us for any length of time, and we 
shall discern the signs of the deluge — for the present 
capitalistic system of production. We shall then be 
compelled to readjust our economic system and find a 
place for the unemployed. 

At the present day, the unemployed class is a neces- 
sary supplement to the capitalistic system, for it fur- 
nishes the recruiting ground for enlisting laborers to 
under-sell their comrades in the labor market. True to 
the rule of economics, the capitalist needs a large supply 
of labor so that the demand may not exceed the supply, 



32 THE SOCIAL COMMONWEALTH, 

and so that the price of labor may not be prohibitive 
of profits. Yet when this labor supply becomes too 
large, we have "dangerous discontent/' the growth of 
"demagogues," and "conditions that are subversive of 
social order/' "and the established rights of property." 
Accordingly, we must obtain markets in order "to give 
employment to our people/' and keep conditions in 
statu quo. The Huns under Attila sought for new 
lands, because middle Asia was, literally, drying up for 
lack of a proper water-supply. The English settlers in 
America displaced the Indians because England was 
too small a country to produce enough to feed its own 
people. But we are seeking new fields for our com- 
merce because we are producing too much — which, 
under our present economic system, we cannot consume. 
And what will "scientific management" do for us? 
It will make us more efficient, enable us to produce 
more, to have a larger unemployed class, and force us 
to seek still other markets. All credit is due to our 
scientists and inventors for their splendid achievements 
in industry and commerce. But we are rapidly ap- 
proaching a point, where we cannot afford the luxury 
of improvements in science without improvements in 
economic organisation. We need scientific management 
in distribution and inventions of methods of economic 
re-organization to go hand in hand with the steps for 
increasing production. In short, we need a union be- 
tween the workers in the field of political science and 
the inventors in the domain of natural science. And 
the most pressing problem which they, working togeth- 
er, must solve in the near future is the problem of un- 
employment. 



CHAPTER III. 
Unemployment and the Minimum Wage. 

The reader will recall the famous law in economics 
formulated by Gresham, namely : that whenever clearer 
money and a cheaper currency circulate together 
in the same country, the cheaper money will rapidly 
drive the better currency from the land — because 
the dearer money will be hoarded as more valua- 
ble. But this fundamental principle, known as "Gresh- 
am's Law," is of much wider application. The unscrup- 
ulous competitor in business will drive out the ideal- 
istic employer, because the latter will not be able to- 
meet the prices of his more thrifty rival, w!k> often se- 
cures low cost of production by the grinding of the 
laborers. In short, industry is like water, and both 
always seek the lowest level. We may state as a corol- 
lary to Greshanrs Law, as follows : Wherever you have 
a condition of competition between low-priced labor 
and higher-priced labor, the latter will tend to be forced 
down to the level of low-priced labor. 

To remedy this condition, we have the principle of 
the Minimum Wage for labor, which has been popu- 
larized by the important work in economics of Sidney 
and Beatrice Webb. Their contention is that the Gov- 
ernment ought to< place a price limit below which no 
employer might be able, lawfully, to engage any labor- 
er. The last United States census has shown that the 
lowest possible expenditure per year for an average 
family (of five persons) in order to preserve healthful 
family life is nearly $620, and this corresponds, rough- 
ly, to the conclusions of John Mitchel in his "Organ- 
ized Labor." As there are about three hundred work- 



34 THE SOCIAL COMMONWEALTH, 

ing days in the year, each wage-earner should receive 
at least $2.10 per day at constant employment, in order 
to safeguard the American standard of living. The 
theories of the Webbs would lead to the conclusion that 
we ought to prohibit any employer from paying less 
than $2.10 per day, and a proportionate increase in 
those industries (like seasonal trades) where many 
days are lost through unemployment. 

Omitting the obvious objection that such a program 
could not be followed in the United States, where the 
Courts would annul such legislative interference with 
"individual liberty" as contrary to* the Constitution and 
in violation of the provisions guaranteeing the "sacred- 
ness" of contract, there are still other vital objections 
on purely economic grounds. Those employees whose 
labor is of such small economic value that the payment 
of $2.10 per day would entail an economic loss on the 
employer would be forced down into the class of the 
unemployed. The Webbs classify all such unemployed 
as abnormal or unfit, and frankly admit that society 
would have to make some provision for them — as we 
do to-day with recipients of charity. But such consid- 
erations, they tell us, must not prevent us from insur- 
ing a proper livelihood for those whose services are 
worth more than the legal minimum wage, but whose 
economic welfare is endangered by the unwholesome 
competition of the unfit. 

We are rapidly passing the time when one or more 
nations (as England prior to 1870, and as England, 
France, Germany and the United States since that 
time), can control the manufacturing and commerce 
of the world and dictate financial policies. The indus- 
trial revolution is world-wide in its significance. And 
the one great fact that stands out prominently is this : — 



UNEMPLOYMENT AND THE MINIMUM WAGE. 35 
the improvements in industry, invention, scientific man- 
agement and skilful finance have made possible the pro- 
duction of vastly more than the world can consume 
from day to day. In an industrial democracy this 
would form a subject for congratulations and thanks- 
giving-day proclamations, since it would signify a re- 
duction in the hours of labor, higher wages (and its 
necessary complement, a higher standard of living"), 
and a large economic surplus for future generations. 
But under our competitive system, where work is clone 
not for an accumulation of goods but for a disposal of 
goods and a quick conversion into profits, there is no 
demand for any one of these three benefits. 

On the contrarv, the exigencies of our industrial sys- 
tern often require the absolute destruction of property 
in order to safeguard profits of individuals and classes. 
Thus the cotton planters of the South frequently an- 
nounce that they are compelled to destroy a portion of 
the large supply of a fruitful year, because they can 
obtain a larger margin of profit on a smaller supply of 
cotton due to the enhanced price of the crop. Many a 
farmer has thus been ruined "on the expectation of 
plenty." In fact, destructive wars (like the Spanish- 
American, English-Boer, Russo-Japanese) , earth- 
quakes (like that of Messina and San Francisco) and 
all catastrophes that are accompanied by a large de- 
struction of property are necessary to our present-day 
industrial system. They stimulate activity, ofifer larger 
fields for employment and create business booms (as 
the quick development of the trusts after the Spanish- 
American War and the rapid progress of California, 
after the earthquake). In spite of all the condemna- 
tion hurled by our peace-lovers and humanitarians 
against the waste of life and capital incidental to war, 



36 THE SOCIAL COMMONWEALTH, 

earthquakes and plagues, these are beneficent institu- 
tions to moderate the severity of the competitive sys- 
tem, for they present better opportunities for obtaining 
employment and larger rewards for labor. Wars, 
plagues and earthquakes may be blessings in disguise 
(wearing heavy, dark masques), for they tend to reduce 
the number of the unemployed and raise the standard 
of living of those who are employed. They convert a 
large part of energy now dissipated in vice, crime and 
"in seeking for a job" into work either of rebuilding 
(as after earthquakes) or destruction (as in war). 
These luxuries of war and disease are very costly, but 
as long as we preserve a system that eliminates from 
industrial activity one man out of every ten, because 
nine men can supply the needs of ten, so long must we 
have some substitute like war, unless we would starve 
the tenth man. It is true that it would be more logical 
to pay the tenth man and abstain from war, even 
though the tenth man were paid merely "for marching 
up a hill and then down again" without contributing 
anything to civilization or progress. How much more 
logical would it be to pay the tenth man and utilize his 
energy for some benefit to humanity? But this we 
cannot do so long as individual profit is the mainspring 
of economic activity. 

Nor would the application of the principle of the 
minimum wage solve this problem of unemployment. 
It would tend to safeguard the standard of living of 
those who do work and guarantee a certain minimum 
of the comforts of life for those who are employed. It 
is, in principle and results, exactly analogous to strong- 
labor organizations that can compel employers to pay 
higher wages than might be obtained by individual bar- 
gaining between employers and employees. In foct, 



UNEMPLOYMENT AND THE MINIMUM WAGE. 37 
were labor organizations sufficiently strong to demand 
and secure, from employers, concessions in wages and 
hours of work that would safeguard a high standard of 
living for all workers (unorganized as well as organ- 
ized), there would be no necessity for any minimum 
:e law, since proper remuneration for services 
could be obtained without resorting to the law. A 
minimum wa<^e law is the cry of those who desire a 
substitute for strong labor organizations, or of those 
who have concluded that labor organizations can never 
be strong enough to guarantee a living wage for 
workers. 

Neither the minimum wage nor organizations of 
labor can solve the problem of unemployment. And 
this is due to conditions inherent in our competitive 
svstem that cannot be eliminated bv the organization of 
strong labor unions or governmental regulations, short 
of a modification of the competitive system: of industry. 
So long as science and industrial management have 
made it possible for nine men to do the work of ten. 
and zee have no proper method for utilising the labor 
of the tenth man, we must have unemployment. Our 
problem is to find a place for this tenth man; and if 
we offer this "marginal" workingman a living wage. 
we shall, automatically, solve the problem not only of 
unemployment but also of a minimum wage. Instead 
of restrictive laws and struggles between capital and 
labor, we need but some effective institution which 
shall supply work and a living wage to those who are 
denied these benefits to-day. in order to humanize our 
industrial system. It will not eliminate competition. 
but will raise its plane, by offering the opportunity to 
those who are unable to secure a livi in the 

competitive system of accepting, as an alternative, 



38 THE SOCIAL COMMONWEALTH, 

employment at a living wage outside the competitive 
system — just as the open fields of the West in early 
American history effectively regulated the problem of 
unemployment, and its necessary consequence, poverty. 

Our problem, therefore, is to find a living wage for 
the unemployed outside the pale of the competitive 
system, that will secure for them the necessities of life 
while safeguarding their mental and physical welfare. 
This would solve the problem of the minimum wage 
and, at the same time, eliminate unemployment. It 
would serve, likewise, as a regulator of the competitive 
system by reducing the periods of over-production and 
panics. It would act as the safety valve in the onward 
march of civilization, and prevent the explosions in- the 
engine of progress due to the accumulated pressure of 
the energy of the unemployed and underpaid. The 
escaping steam — the present-day unproductive forces 
of the unemployed — would be directed along lines that 
might prove of inestimable advantage to mankind. 

To-day, we have poverty in the midst of plenty; 
unemployment while there is so much of the world's 
work to be done; and the minimum of rewards for 
labor and thrift when bounteous nature has so much 
to offer. Without attempting any revolutionary changes 
in our economic system, a certain regulation and modi- 
fication of the competitive system of industry is indis- 
pensable in order to insure industrial, political and 
moral freedom. We must now examine the character 
of the institution that shall eliminate unemployment, 
insure a minimum wage and raise the plane of the 
present competitive system of industry. 



CHAPTER IV. 
The Labor Commonwealth. 

The questions of unemployment and a minimum 
wage constitute the keynote of the whole social prob- 
lem. Let us devise some method for assuring employ- 
ment and for the payment of a decent, living wage and 
the problem of poverty is solved. We shall make 
possible a better economic adjustment, an elimination 
of the misery in human life, and the opportunity for the 
self-realization of the individual. 

The unemployed are usually divided into three well 
defined classes : ( i ) hard-working and honest people, 
ready and willing to labor for their living, but forced 
into the ranks of the submerged tenth by the ruthless 
competitive system which rejects them as "unfit"; (2) 
the unemployable, or those who- prefer the lives of 
idlers and tramps to the toil of their more thrifty com- 
rades; and, finally, (3) the criminal class and the 
prisoners within the walls of the penitentiary. 

It is one of the most curious facts in history that 
experiments with the labor of the criminal class should 
offer us the prospect of a solution of the whole problem 
of unemployment. Different states have made many 
attempts to make use of prison labor. The discovery 
soon was made that the prisoner need not be a charge 
of the state, but might be made to pay for his mainten- 
ance. At first, many states would hire out the pris- 
oners to contractors so as to avoid the trouble and the 
"Socialism" involved in state activity. But to the 
dismay of the politicians, it was found that the voice 
of labor was strong in denouncing this competition 
between free and slave labor. In fact, the poor work- 



-10 THE SOCIAL COMMONWEALTH. 

man, who had lost his place because his employer 
had found it more profitable to engage prison labor, 
was not constrained to examine economic text-books to 
ascertain the reason for his sad plight. He felt and 
understood the situation even though he could not have 
assigned appropriate economic reasons. The old truth 
that competition secures the cheapest price — in com- 
modities., labor and life — was amply illustrated. 

Accordingly, the demands of the laboring class that 
they shall not have to meet the competition of prison 
or slave labor is now conceded in some states, and, as a 
substitute for contract labor, we are introducing a 
system of direct state activity for the production of 
certain goods not for the general market (which would 
tend to injure the market price and re-act unfavorably 
on wages), but for the use and consumption of state 
institutions. Thus, in a message to the legislature of 
California, Governor Hiram W. Johnson says : "The 
objection to the manufacture of articles in the State 
prisons comes generally, and justly, I think, from the 
free labor of the State. The purpose of, the bill that 
has been introduced is to permit only those articles to 
be manufactured which are used by the State, the 
county, or the municipality, and does not permit their 
sale privately. 

"The restrictions within the bill are such that prison 
labor shall not be brought in competition with free 
labor. The particular measure that has been intro- 
duced has been submitted to the San Francisco Labor 
Council, and has received the sanction of that body. 

"It is presented to you, therefore, with the full 
knowledge and approval of labor within the State of 
California." 

Governor West of Oregon, in a similar message, 



THE LABOR COMMONWEALTH. 41 

presents the same argument for direct state use : "Ob- 
jection has been made to the employment of convicts 
in competition with free labor, and there is merit in 
the objection. ... It should be the aim of the State, 
therefore, to provide them as soon as practicable with 
employment which will remove them as far as possible 
from competition with free labor. The best solution 
it seems to me is their employment in the construction 
of roads.'' 

Now, the good results obtained in such state efforts 
elucidate an important principle, which, it seems, the 
authors themselves do not appreciate. Yet, a careful 
consideration will show that, if the principle be faith- 
fully followed and carefully applied, it may solve the 
whole problem of unemployment. This principle 
follows as an immediate corollary from Gresham's law : 
Wherever you hare a condition of competition between 
low priced labor and higher priced labor, the latter will 
be forced down to the level of low priced labor. Trade 
unions and federations of labor are useful in mitigating 
the rigor of this rule by raising the wages of organized 
labor. But, since they cannot control the industrial 
system, they cannot solve the problem of unemploy- 
ment. If one man out of every four is numbered 
among the unemployed, organized labor cannot supply 
work for this fourth man, although it might increase, 
appreciably, the wages of those who are employed. 

In order to preserve a relatively high wage for 
labor, therefore, we must rear an institution which will 
eliminate low priced labor by offering employment at 
a minimum wage, which will be sufficient for the 

lintenance of a proper standard of living. And the 
work of prisoners under the direct control of the state 
for the use of state institutions, not in competition with 



42 THE SOCIAL COMMONWEALTH. 

the industrial market, suggests the remedy. These ex- 
periments with prison labor were surpassed by the suc- 
cessful efforts of the farm colonies, established for the 
support and maintenance of vagrants and tramps, who 
were to be redeemed for honest labor. Now, if prison 
labor and tramp labor can earn sufficient to support life, 
why cannot the honest toil and willing work of able 
bodied men bring forth sufficient for their prime eco- 
nomic needs? It is a disgrace to our civilization to 
admit that we can find a place for the criminal and the 
idler but none for the man who dares to preserve his 
self-respect, when our haphazard economic system 
declares him "unfit." Yet the explanation of this 
apparent enigma presents the remedy. 

It is our inability to properly adjust the demand so 
as to correspond with the enormous increase in produc- 
tion that is at the root of the entire problem of unem- 
ployment. If our laborers were paid the highest pos- 
sible wages — instead of the lowest — consistent with 
efficient production, then they would have the pur- 
chasing pozver essential for an increased consumption 
and for a demand for new products. Manufacturers 
would gain by such an increase in the demand for 
their products, and our industrial system- would operate 
to raise the whole social fabric — to insure larger re- 
wards to the laborer and to increase the products of 
industry. Unfortunately for the laborer, we have con- 
ducted our industrial system on the theory that cheap 
production — including a! cheap labor force — is the sine 
qua non of economic progress. We are killing the 
goose that lays the golden eggs. By decreasing the 
rewards of labor we are limiting the field for the prod- 
ucts of such labor, and thus decreasing the profits of 
the manufacturer and trader. Furthermore, so long as 



THE LABOR COMMONWEALTH. 43 

there is a large portion of laborers who receive] low 
wages, their brethren in the labor market must suffer 
the consequences of such low wage competition. 

The fatal error in an economic system like ours, that 
is based on individual profit alone, is the fact that we 
are continually striving to reduce the rewards of labor 
(as part of the programme of a low cost of produc- 
tion), heedless of the fact that in so doing we are 
limiting the purchasing power of the producers — de- 
creasing the consumption of products of our industrial 
system. A concrete example will illustrate the effect 
of low priced labor — as the influx of Chinese in 
California. The high rates of Western wages would, 
undoubtedly, suffer a material decrease and the looked 
for increased product would not materialize, for the 
very good reason that the low wages would be insuf- 
ficient to create a demand for such products. In short, 
the adoption of low priced labor becomes a check on 
consumption of products, which, in its turn, limits the 
productivity of the country. Such low priced labor 
becomes unendurable not only to the laborer but to the 
whole social system, unless the inevitable law of com- 
petition in the labor market is checked and modified by 
trade unions, and, more important still, by the presence 
of free land to which the laborer may resort as a 
"squatter" or free farmer. 

Our industrial system, therefore, is constantly turn- 
ing out a large portion of the workers as unfit — men 
whom it can use no longer because it has more than a 
sufficient supply of labor to meet with the demand for 
commodities produced by such labor. Now, evidently, 
if we place these men back into industrial life, they will 
only displace others (so long as our failure to regulate 
demand and supply continues). But we can easily 



44 THE SOCIAL COMMONWEALTH. 

learn the lesson taught by prisoners and tramps. We 
can place these men in industrial camps and farm 
colonies, where their labor will be utilized not for 
general production, in competition with the markets of 
the world, but for producing their own immediate 
necessities. In short, we can establish colonies for the 
unemployed that will constitute economic self-sufficient 
units, outside the pale of the ruthless competitive strug- 
gle for existence. 

In fact, in the early period of American history the 
unemployed, by moving to the unexplored fields of the 
West, did constitute themselves into small self-sufficient 
economic units, and, thereby, effectively regulated the 
labor market. We can easily duplicate the situation 
to-day by substituting for the free lands of the West 
the equally effective public control of large tracts of 
land for agricultural and industrial development by 
the unemployed. 

The United States Government expends over one 
hundred and forty million dollars per year in pensions 
to the veterans of the Civil War, and if we add to that 
sum the very large annual expenditure for the army 
and navy, we shall find that every man, woman and 
child in the United States pays, on the average, four 
dollars per year for the national defense. Were we to 
spend an equal sum for correcting the abuses of the 
economic system of our day, and for supporting that 
great industrial army that haunts our cities, seeking for 
the opportunities for labor, would not such an expendi- 
ture be justified? Even as a war measure, neces- 
sary for self-defense — not to speak of the humanitarian 
principles involved — in protecting society from a. mob 
of unemployed, the price is not too high. But as a 
matter of fact, we can solve the problem, of unemploy- 



THE LABOR COMMONWEALTH. 45 

ment, and with it that of poverty, by the expenditure 
of a much smaller sum, for statesmanship, rather than 
money, is essential for its solution. 

In presenting any plan for the solution of the problem 
of unemployment, however, it must be borne in mind 
that we are dealing not with prisoners and criminals 
nor with vagrants and idlers, that are grouped in the 
class of u unemployables ,? — for such characters present 
problems for criminal law 7 and philanthropy rather than 
for economics. We are interested primarily in those 
who have fallen into the unfortunate class of the 
unemployed not because of any gross moral deficiencies, 
but either ( I ) because of lack of efficiency as individual 
workingmen w T hen compared with more competent 
laborers, or (2) because of faults and misfits in the 
economic adjustment of society for which individual 
workers cannot be held responsible. 

The Federal Government owns vast areas of 
undeveloped land, situated, for the most part, 
in the western states. Individual settlers have 
neither the capital nor the necessary labor sup- 
ply for developing large tracts of land without 
assistance. Yet, if the government, or some agent of 
the Federal government created specifically for that 
purpose, should offer to every American citizen employ- 
ment with the assurance that in return for such labor 
he would receive food, shelter and a small sum for 
clothing, there is no doubt but that these fields could 
raise a sufficient food supply and elementary clothing 
to support the families of all the unemployed. We are 
supporting an army for the purpose of national defence, 
even though that army fails to produce its own food 
and clothing. It would be proper to create an institu- 
tion which will convert the unemployed into an indus- 



46 THE SOCIAL COMMONWEALTH. 

trial army, particularly if such industrial army should 
prove self-supporting and, at the same time, solve the 
problems of unemployment and poverty. 

The cardinal feature of the activities of the colonies 
for the unemployed would be : to produce only necessi- 
ties, and only those things which can be produced 'with- 
out the application of extraordinary skill — the labor 
colonies would produce little of the luxuries of life (as 
automobiles, high class furniture, ornaments for per- 
sonal wear, palatial dwellings, etc.). The colonists 
must be given to* understand that they must produce 
all the necessities of life in their own communities, 
without other help than the guidance of competent en- 
gineers, of expert agriculturists and administrators, 
and of certain essential machinery. Such colonies for 
the unemployed citizens of the United States would 
prove self-supporting, for the colonists would produce, 
not for the general market, to add to the distress of 
overproduction, but for their own needs. 

The labor colonists would be subdivided into three 
general divisions : 

(i) Farmers, comprising those who would labor 
to bring forth the food supply for the com- 
munities — wheat, corn, rice, vegetables, eggs, milk and 
dairy products, poultry and meat. In order to> assure 
proper sustenance, the farms must be scattered through- 
out the various sections of the country — some exten- 
sive fields in the Southern States to be devoted mainly 
to the production of cotton, rice fields in Louisiana and 
South Carolina, wheat fields in the North Central 
States, etc. The cotton produced in the Southern 
States would be utilized for all the colonies just as the 
wheat of the North Central States would feed all the 
colonists. 



THE LABOR COMMONWEALTH. 47 

(2) Tailors and artisans, to produce clothing- for the 
labor colonies. It need hardly be emphasized that the 
colonists would make no attempt to manufacture the 
luxurious dresses of the idle rich — the furs and feath- 
ers, the jewelry and elaborate silks of high society. 
Their labor would be confined, for the most part, to the 
production of goods essential to* a thrifty laborer — 
shoes, underwear, shirts, men's suits, ladies' dresses, 
overcoats and hats. Nearly all the raw material for 
such manufacture would be obtained from the farmers 
of the communities — wool, cotton, leather, etc. But, 
of course, some money would have to be expended in 
purchasing certain supplies from the competitive sys- 
tem. Thus the highly specialized machinery (used in 
the manufacture of shoes, men's clothing, etc.) could 
not profitably be produced within the labor colonies, be- 
cause the latter would not be able to furnish the skilled 
labor required for such w r ork. Likewise, small articles 
like buttons, nails, pins, etc., might, with more profit, 
be purchased from the competitive system, as it might 
prove inadvisable to erect large plants for the manu- 
facture of these necessities 

(3) Masons and carpenters, to construct the build- 
ings for shelter and the simple furniture that the home 
of a thrifty workingman requires. Tapestries, pianos 
and the other luxurious furnishings of the rich would 
find no place in the scheme of production in the labor 
colonies. But the manufacture of tables, chairs, beds 
and dishes would form a very important industry in 
such communities. In this connection, it is worthy of 
notice that Edison is just completing some highly in- 
teresting experiments in the uses of concrete, and the 
future will probably present pictures of home life in 



48 THE SOCIAL COMMONWEALTH. 

these colonies in which the concrete house with its 
concrete furniture will stand out prominently. 

These labor colonies, scattered through many states 
of the union, would form a system analogous to the 
national banks, where the produce of each colony would 
be credited to the account of that particular commun- 
ity, and all the communities together would constitute 
a "clearing house" for the proper distribution of prod- 
ucts and the profitable disposition of any surplus goods. 
This would result in the elimination of one prolific 
source of panics, namely, the stringency in the money 
market, since production in the labor colonies would 
be for direct consumption, and only the surplus would 
be utilized for conversion into money or goods pro- 
duced within the competitive system. The excess 
products of such colonies would be disposed of in the 
open market, and the money so obtained, after deduct- 
ing the interest on the capital that the government 
might have invested, including a replacement fund for 
the wear and tear of machinery, might be apportioned 
as dividends among the colonists. Such division of 
the profits obtained on the sale of excess products — 
after assuring the physical needs of the colonists — may 
be so apportioned as to stimulate work and reward in- 
dustry. A well regulated scheme for such profit shar- 
ing- might be introduced so as to allow a larger share 
to the hardworking and industrious over the less useful 
in the community. As these excess profits would be the 
only opportunity for obtaining any of the luxuries of 
life, by enabling colonists to' purchase products over 
and above actual necessities, we may be sure that there 
would be a strong motive for work. 

Furthermore, such an arrangement has the merit of 
securing a fair standard of living for all workers be- 



THE LABOR COMMONWEALTH. 49 

sides a higher standard for those who prove them- 
selves more fitted in the industrial struggle for exist- 
ence. The Labor commonwealth would say : we offer 
every man the opportunity for earning his owrt living, 
and his wages shall be sufficient to supply his family 
with the necessities of life. Such a proposition must 
not be confounded with the dangerous methods em- 
ployed in Ancient Rome for supporting the poor by 
offering grain gratis. This procedure must breed lazi- 
ness and corruption. But in these labor colonies, each 
man (and his family) will be provided for only so long- 
as he works to accumulate, for the colonies, the grain, 
clothing and shelter necessary for a tolerable existence. 
We shall not dangle before his eyes the unearned 
wealth of plundered provinces and the spoils of the vic- 
tors, but the rewards due him by the sw T eat of his brow 
and the labor of his hands. Furthermore, while the 
bare necessities of life are assured him, he will learn 
that he can share in the luxuries and recreations that 
make life worth while only by the success of the com- 
munity in producing an excess of materials and his 
honest toil in procuring such profits. 

In short, the labor communities will produce all the 
r'ccessities of life for the colonists, and, after securing 
such necessities, will dispose of the surplus, if any, in 
the competitive market. It might with reason be urged 
that this dumping of surplus goods into the open mar- 
ket might so affect the competitive system as to cause 
a complete breakdown, so that all wage-earners might 
have to become members of labor colonies. But it 
must be remembered that such surplus will never be too 
large, for there will be no compelling motive of indi- 
vidual profit to convert laborers into wage-slaves. On 
the contrary, as soon as there should prove to be a suffi- 



50 THE SOCIAL COMMONWEALTH. 

cient surplus, the managers of the labor communities 
would reduce the hours of labor and offer opportun- 
ities for healthful recreation and useful instruction. 
Part of the surplus would be utilized in the employ- 
ment of teachers, lecturers and actors to develop the 
best cravings of mankind. 

Furthermore, the disposal of these surplus products 
in the competitive field would hardly disorganize the 
competitive system although it might tend to rearrange 
certain industries. For example, the production of 
necessities (simple clothing, agricultural products, 
etc.) in the competitive system might decrease because 
of the increase in our labor colonies, but any surplus 
among the colonists would furnish a strong incentive 
for obtaining the luxuries of life. Such luxuries would 
have to be obtained from the competitive system ( since 
our labor colonies would produce only necessities) and 
thus the total change would be a decrease in the pro- 
duction of necessities within the competitive field and 
an increase in the production of luxuries. At the pres- 
ent time, the unemployed are, to a large extent, non- 
consumers, and they thus limit the market for economic 
goods. Our labor colonies, however, would foster a 
new class of consumers and would increase the market 
in necessities and luxuries. Now we need earthquakes 
and w T ars to stimulate trade and promote economic 
well-being; but labor colonies w 7 ould serve the same 
purpose without imposing the awful conditions de- 
manded by warfare and catastrophies. 

The net result of a system of labor colonies, pro- 
ducing the necessities of life for their members, would 
be to raise the plane of competition. It would solve the 
problem of unemployment by offering to every person, 
who is neither a criminal, a vagrant nor an idler, the 



THE LABOR COMMONWEALTH. 51 

opportunity for securing the necessities of life. It would 
not abolish competition but limit its scope and raise its 
plane. The state would say to the citizen : thou shalt 
not barter thy body and soul for the bread and clothing 
that nature demands, even as we refuse to sanction 
any contract for individual servitude. But every indi- 
vidual, who feels that he can earn for his family more 
than the necessities of life, may remain within the com- 
petitive system. The labor colonies will automatically 
establish a minimum w r age, for no one will be so fool- 
hardy as to work for smaller wages, within the com- 
petitive system, than will secure for him the necessities 
of life. No limit, however, is placed on the maximum 
wage that the competitive system may offer. Not to 
level ranks should be our object, but to raise the plane 
of all economic life. 



CHAPTER V. 
Insurance Against Unemployment. 

i — Immigration and Unemployment. 

Fortunate indeed is our country because its vast ex- 
tent and diversified industries make possible the organ- 
ization of labor colonies that can be economically self- 
sufficient. The cotton of the Southern States and the 
wool raised in the Western States would furnish the 
raw material that would be manufactured on the banks 
of the Hudson, the Delaware and on the shores of the 
Great Lakes into the simple clothing that would supply 
the needs of all the colonists, while the wheat and corn 
of the North Central States would feed the members 
of the various labor communities. Small countries like 
England and Belgium can hardly hope to organize 
many self-sufficient colonies for the unemployed, and 
only under some form of Imperialism (it may take the 
shape of the democratic Imperialism of Great Britain), 
that would unite the mother country with the vast 
stretches of fertile land in the colonies, could such labor 
communities be successfully established. 

It might l>e urged that such favorable opportunities 
for earning a livelihood in the United States would 
attract an unusual flood of immigration to this country 
that might endanger the process of Americanization 
and might even result in breaking down the whole 
scheme of colonies for the unemployed, by the tremen- 
dous increase of the labor supply in this country. But 
we should provide that only American Citizens 
would be eligible to these labor communities, and it 
could, therefore, offer little inducement to any pro- 



54 THE SOCIAL COMMONWEALTH. 

spective immigrant who would have to wait at least five 
years for admission. Yet, if, in the future — however 
improbable it may appear to us to-day — practical exper- 
ience would prove that such labor colonies tend to 
increase immigration to the danger point, then we must 
frankly prepare for a period of restriction in immigra- 
tion. Such a restriction policy would be the result not 
of any selfish motive of closing the door on the op- 
pressed, and not even as a measure of self-protection 
(although it would operate as such), but rather to 
complete the realization of the American ideal of 
democracy. If social justice can be secured only by a 
restriction of immigration (and I do not now imply 
that this method would, necessarily, be followed), then 
we owe it to our American ideals to apply the remedy 
unflinchingly — even though such a policy may seem 
contrary to the American spirit. We owe it not only 
to ourselves, but to the world, to strive and labor for 
the realization of a system of social justice. For if we 
can solve the problem of unemployment in these United 
States, we become the teachers of the world, and the 
lands of the oppressed may profit by our example. 

2 — Malthusian Theory and the Problem of Poverty. 

Will not the offer of employment, with the assur- 
ance of a decent livelihood as payment therefor, tend 
to increase population beyond the point of sustenance? 
Whenever the problem of poverty is discussed this old 
bogey of the Malthusian theory creeps in to frighten 
away the children of our civilization. However much 
the last century has taught us about the ability of sci- 
ence to increase the fertility of the soil and the reaping 
of larger and larger harvests, many still, unconsciously, 
adhere to the principle enunciated by Malthus. And 



INSURANCE AGAINST UN EMPLOYMENT 55 

this is not at all surprising when we realize that the 
i theory presents a partial truth which can- 
not be swept aside by mere denunciation. Indeed, there 
have been so many earnest and "complete" refutations 
of the Malthusian theory, that we are justified in con- 
cluding that there must be something in the theory 
after all. 

The truth is that the Malthusian theory has an indi- 
vidual rather than a social application. We need not 
fear that the world or the United States will not pro- 
duce in sufficient measure to support its inhabitants, 
for the reason that we are increasing the food supply 
more rapidly than the increase in population. As far 
as the social application of the Malthusian theory is 
concerned the formulas of Malthus are unwarranted, 
for the scientific improvements devised in the last cen- 
tury are constantly tending to keep the food supply al- 
ways in advance of the population. But, if in a par- 
ticular community one-half of the population have re- 
sources far in excess of their needs and the other half 
are underfed, the latter may indicate some truth of the 
Malthusian theory. This would result not because of 
any natural causes but solely because of our failure to 
solve the problem of the distribution of wealth. A so- 
cial system, properly adjusted, would find a place for 
the "other half." Only those individuals who happen 
to be deprived of sustenance (which they might obtain 
under a better social system) can furnish evidence of 
the partial truth in the theory of Malthus. 

But, as a matter of fact, the Malthusian theory must 
be modified in another important aspect. Statistics 
prove that large families are found not among the rich 
and the well-to-do, but among the poor and the very 
poor. Omitting the psychological explanations for this 



56 THE SOCIAL COMMONWEALTH. 

fact, there remains the sufficient economic reason that 
to the poor man — with his low standard of living — the 
child is an asset. For the small sum required to raise 
the baby to maturity, the father will be able to repay 
himself with increased interest in the wages that the 
child will bring in the future to help support the fam- 
ily. The wave of race suicide that is menacing not 
only America but many other countries consists in the 
postponement of marriage and the limitation of off- 
spring among the rich and the middle class. Those 
who have already sunk to the level of the poverty 
stricken seekers for food have neither the foresight nor 
the will-power to adequately restrict the propagation 
of their kind. They feel that their condition cannot be 
aggravated, and so "after me the deluge/' 

But the intelligent and educated middle class have 
the leisure and the foresight to examine the prospects 
for family life. They seek for opportunities for their 
children at least equal to those of their parents, and 
they refuse to enter the bond of matrimony, or they 
consciously limit the number of children in wedlock, in 
order to safeguard their own position in life and the 
opportunities of the children already born. They are 
not satisfied with mere bread for their offspring. They 
desire for themselves and their children education, leis- 
ure and the time and opportunity for recreation, which 
is the chief delight of living. In short, the struggle for 
existence signifies to them a battle not for mere bread 
but for a high standard of living', which shall include 
opportunities sufficient for developing the best that is 
in each individual. In conclusion, therefore, we can 
fay that the Malthusian theory has this much of truth 
m it, namely, the limitation of population is due, not 
to a shortage of food supply, but to a determination on 



INSURANCE AGAINST UNEMPLOYMENT 57 

Ike part of a large and growing portion of the popula- 
tion to adopt a higher standard of living; and we need 
hardly tear that any society will rea^h the starvation 
poi:u because of the natural failure o£ the food supply, 
but rather that our unethical economic distribution is 
i he chief cause of unemployment, poverty and race 
suicide. 

In the colonies for the unemployed class, therefore, 
there cannot be any such enormous increase in popu- 
lation as to endanger the food supply of our country. 
The colonists will receive the physical necessities for 
existence — food of good quality (but not expensive or 
luxurious fare), ordinary clothing for a workingmarfs 
family (just as the soldier receives his uniform) and 
adequate shelter. But for the inviting repasts of the 
rich, the ornamental clothing that plays such a large 
part in the family bill (particularly for women's wear) 
and for the expenses involved for healthful recreation, 
the colonist will have to depend on his small share of 
the excess profits secured from the surplus products of 
the labor colonies. As the relatively large incomes nec- 
essary to a very high standard of living could be ob- 
tained only outside of the colonies for the unemployed, 
we may confidently expect that such provision for the 
necessities of life within the labor colonies will not tend 
to increase the population. 

3 — Some Aspects of the Labor Commonwealth. 

In the examination of the family budget the inves- 
tigator finds that the three elements which enter into 
the cost of living, namely, food, shelter and clothing, 
are very unequally divided. Thus, the cost of food for 
one family living on an income of three thousand dol- 
lars per year and of another family with an income of 
thirty thousand dollars per year do not show that wide 



58 THE SOCIAL COMMONWEALTH, 

divergence proportionate to the respective incomes. In 
no case, probably, would the table expense of the latter 
be ten times that of the former. The large disparity in 
the expense would be accounted for in the examination 
of the shelter and clothing budgets. Economists have 
stated that the rent paid by a family constitutes, on the 
average, one-fourth of its income, while the expenses 
for clothing, including the jewelry, silks and elaborate 
trimmings of our ladies, are the despair of husbands 
and fathers. In short, the expense for food increases 
but slightly with the increase in income, whereas the 
cost for palatial dwellings, attractive furniture and elab- 
orate costumes constitutes the elements of luxurious 
living which raise the family bill from three thousand 
dollars to thirty thousand dollars and more per year. 
Those who strive for luxurious living, therefore, will 
have to seek employment outside of the labor colonies, 
for the latter will produce only the necessities of life 
and a small surplus for comfortable existence. And yet, 
this continual striving for obtaining the luxuries of life 
— the dress that plays such important part in the life of 
woman, the appearance of affluence that is so* attractive 
in family life, and the longing to live in palatial homes 
from which neither man nor woman is free — are im- 
portant factors tending to preserve our labor colonies 
from an influx of new members. Such desires repre- 
sent the yearning for a higher standard of living, even 
to the limitation of offspring, if necessary, and present 
one strong guarantee for the success of the colonies for 
the unemployed. 

Finally, the principle upon which these labor colo- 
nies can securely rest is : every man is entitled to work 
and to receive, for his labor, the physical necessities for 
existence — the bread and shelter and ordinary clothing 



INSURANCE AGAINST UNEMPLOYMENT 59 

which nature demands. All the luxuries of life may be 
shared among- the more successful in the struggle for 
existence, but only after adequate provision for all. 
The effect of such an arrangement will be not to elim- 
inate competition but to raise its plane; to substitute 
for the merciless struggle of the poor for bread and 
shelter, the more interesting struggle of well-fed men 
for the luxuries, the pleasures and the honors of life. 
The colonies for the unemployed will automatically fix 
a minimum wage below which the struggle for exist- 
ence cannot sink. 

Conservative statesmen would probably oppose such 
remedial legislation for the purpose of solving the 
problem of unemployment, and might shield their op- 
position under the plea that the Federal Government or 
Congress has no constitutional right to engage in such 
enterprises. Without attempting any extended legal 
discourse, it may be safely assumed that if Congress 
should establish such an institution, the United States 
Supreme Court would sustain the legislation — probably 
on the theory that the "general welfare" demands an 
added exercise of the "police power" to avoid the evil 
consequences of unemployment. Such labor colonies 
may likewise be viewed as an auxiliary to the Amer- 
ican army, and as a sort of national reserve which 
might be called to war in case of necessity. It might 
be properly classified with the pension system as a nec- 
essary expense for the national defense. In time of 
peace, these labor colonies would be the bulwark of our 
industrial army, and in war time the government might 
utilize them as the chief recruiting ground for the "na- 
tional militia." No constitutional objection could then 
arise, for Congress would be the sole judge as to the 
wisdom of such a war measure. 



60 THE SOCIAL COMMONWEALTH. 

But perhaps the best method to be pursued in the 
founding of the labor colonies would be to establish an 
independent corporation or association, aided, indeed, 
by the government, but separate and distinct in its or- 
ganization. Congress would provide that as much pub- 
lic domain as necessary be set aside for development by 
an association, known as the "Labor Commonwealth," 
whose charter shall be scrutinized and approved by the 
Federal Government. Every citizen of the United 
States, who 1 has been a, resident of this country for seven 
years prior to his application, might become a member 
of this association on the payment of a small initiation 
fee, which will entitle him to membership in the com- 
monwealth, provided, of course, he is neither a criminal 
nor an "unemployable" tramp or vagrant. This insur- 
ance premium, to protect the workingman against the 
danger of unemployment, might be regarded as a share 
in a mutual insurance company. Membership in this 
association would entitle him to employment in one of 
the labor colonies with payment (in the shape of food, 
clothing and shelter) sufficient to* support his family 
with the standard of living of a hard working farmer 
or wage-earner. The wife and children, over sixteen 
years of age, would be co-workers with the father in 
performing some appropriate task in the labor colonies, 
while any unmarried man or woman over eighteen 
years of age might enter the labor colonies to work for 
wages (in food, clothing and shelter) as an indepen- 
dent wage-earner. In this scheme, the married man 
might have an advantage over the single man since the 
former will receive the added recompense of supporting 
a family, but even to-day the public school, as an insti- 
tution, discriminates against the unmarried by using 
public money for instruction of children. Besides, as 



INSURANCE AGAINST UNEMPLOYMENT 61 

soon as there shall be no fear of race suicide, the unmar- 
ried, or those with smaller families, might receive some 
surplus, over and above the necessities of life, as against 
those with larger families. But this is a matter of de- 
tail to be determined upon from time to time in the 
management of the labor colonies. 

The Labor Commonwealth (the association of labor 
colonies) might follow, in some respects, the Federal 
Reserve Currency Plan. Thus, those citizens of the 
United States who shall have joined the Labor Com- 
monwealth (after paying initiation fees as prescribed) 
will have the right to select six members of the Board 
of Directors, three being chosen every second year (in 
the odd numbered years), each director to hold office 
for a period of four years. A system of voting might 
be adopted that would guarantee the possibility of min- 
ority representation, as, for example, granting to each 
member three votes in every election of the Board of 
Directors, which votes the member may distribute 
among one, two or three candidates. The Labor Com- 
monwealth would be guided and managed by a Board 
of Directors of nine members, six of whom would be 
selected by the members of the association, as explained 
above, and three of whom would represent the United 
States Government. The latter might consist of the 
Vice-President, the Secretary of Interior and the Sec- 
retary of Labor. One of the essential features of the 
Constitution would be that every measure, to be adopt- 
ed, must receive the support of a majority of the Board 
of Directors, including at least two of the members rep- 
resenting the Government. The latter would furnish 
guarantees for the payment of loans made to the Labor 
Commonwealth that might be necessary before the as- 
sociation is in good working order. 



62 THE SOCIAL COMMONWEALTH. 

It would be out of place, at this time, to present de- 
tailed methods for the organization of the Labor Com- 
monwealth and minute regulations for admission within 
such communities. It is sufficient to indicate that every 
member of the association might become a worker, in 
one of these communities for the unemployed, a reason- 
able time (one or two weeks) after his application 
therefor, and would be free to withdraw every three 
months from the date of entrance. We have already 
shown that such colonies could never be a source of 
severe loss on the part of the government, and may 
even result in the accumulation of surplus goods that 
might be successfully utilized for improving the condi- 
tion of the poor and uplifting the standard of living of 
the entire nation. 



CHAPTER VI. 
Social Limitations of Competition, 
i — The Darwinian Theory and Group Co-operation. 

Many are the theorists who endeavor to deduce from 
nature certain lessons for the guidance of man, but 
none perhaps are so blind as those who generalize about 
the value of "competition" and "co-operation." The 
strict followers of Darwin examine economic and po- 
litical activity and, finding therein an exemplification 
of the law of "survival of the fittest," see in that cir- 
cumstance a sanction for the competitive system. With 
the confidence of science they look upon the light of the 
struggle for existence and "see that it is good." On 
the other hand, the devout students of Karl Marx, 
starting from an analogous premise, the theory of evo- 
lution and the economic interpretation of history and 
civilization, conclude that mutual aid has been even a 
larger factor in history than competition, and that co- 
operation presents the line of true progress. When we 
examine a book like Kropotkin's "Mutual Aid," and 
learn of the immense value o<f co-operation in the lives 
of insects, animals, and, finally, men, co-operation ap- 
pears not only as an ideal, but as a practical force that 
has been operating for centuries to preserve and im- 
prove mankind. 

Are these two views contradictory? Shall we say 
that the Darwinian theory has outlived its usefulness, 
and that Kropotkin, in his interesting and valuable pic- 
tures of group co-operation — the wild horses of Siberia 
herding in search for water, the birds flying together 
to warmer regions, and the downtrodden farmers of 



64 THE SOCIAL COMMONWEALTH. 

Russia co-operating in "mirs," while the laborers form 
guilds and organize trade-unions — has put forth a view 
that negatives the fundamental principles of Darwin? 
Or shall we attempt a refutation of the invincible argu- 
ments for "mutual aid," clinging to the belief that only 
competition can develop the "fit" who ought to survive. 

Many competent thinkers, unable to reconcile these 
two views, have accepted "Socialism" or "Individual- 
ism" as an adequate explanation of civilization and 
progress. Others, while recognizing both as contra- 
dictory forces, have attempted to modify the applica- 
tion of each by endorsing a hybrid view which would 
include competition and co-operation without any defi- 
nite demarcation of the scope of each. 

Yet, on a closer analysis, we shall find that there is 
absolutely no contradiction between these two views. 
As a matter of fact, the theories of competition and co- 
operation, of the "struggle for existence" and "mutual 
aid," are not opposites, but complements. The com- 
petitive struggle for existence unites with "mutual aid" 
to promote the "survival of the fittest." To use the 
phrase which has become popular : co-operation tends to 
convert the haphazard struggle for the survival of the 
fittest into a well-planned battle for the survival of the 
best. Competition may produce the men most fit to 
survive in a certain social system, but it is the chief 
function of co-operation to improve that social system- 
(by moral rules, law, education, etc.) so that, by com- 
petition, the best men from the community will be se- 
lected for survival and success. 

A single instance, chosen from Kropotkin's "Mutual 
Aid," will illustrate the value of co-operation. He 
dwells long upon the beautiful spirit of co-operation 
that holds together the wandering herds of cattle in 



SOCIAL LIMITATIONS OF COMPETITION 65 

their search for water along the deserts of Siberia, and 
concludes that, but for this strong feeling of kinship, 
entire groups might have been exterminated in a mere 
competitive struggle for existence. In short, co-opera- 
tion is necessary to preserve the community. You 
might, with benefit, have a certain amount of competi- 
tion among individuals composing the group, yet the 
group itself must act as a unit in repelling the danger- 
ous attacks of enemies or safeguarding communal life 
from the severities of nature. And so in human his- 
tory. That race has triumphed which has permitted a 
struggle for existence among the individuals composing 
it, limited, however, by an effective combination of all 
of its component parts into a unified mass in the strug- 
gle for race existence and advantage. 

In the field of politics, the Greeks, in ancient times, 
were perhaps most successful in reconciling individual 
competition with group co-operation. Each little city 
jealously guarded its own individuality and permitted 
its citizens a larger opportunity for self-development 
than any oriental monarchy. But all Greece was united 
in facing the hosts of Persia, and Athens and Sparta 
knew that their rivalry was limited by the co-operation 
necessary to safeguard Hellas. In later days, Greece 
forgot the value of co-operation and fell a prey to the 
individualism that recognizes no higher virtue. Of all 
modern nations, England has probably best appreciated 
the importance of a proper correlation between indi- 
vidualistic competition and social co-operation in poli- 
tics. She has encouraged the development of compe- 
tent governors (like Lord Cromer), offering large 
fields for the exercise of their genius for government, 
while endeavoring to preserve, on the basis of common 
race and language, a certain measure of co-operation 



66 THE SOCIAL COMMONWEALTH, 

among the self-governing units ai the British Empire. 
In the United States, we have an illustration of an at- 
tempt to modify and limit the individualism and com- 
petition of many various states by the co-operation 
required for Federal Government. 

In economic life, it is even more important to ascer- 
tain the proper field for individualism and collectivism, 
for competition and co-operation, because, to a very 
large extent, economic activity determines the survival 
of the individual and the race. If we accept the logical 
deductions from the premise of individualism, we shall 
obtain a society in which "each man's hand will be 
against his brother/' and in which we might succeed in 
developing a few supermen, by sacrificing the masses 
and abrogating the rules of morality and ethics. On 
the other hand, if we endorse the theories of collectiv- 
ism, we may secure a social system in which mediocrity 
will be synonymous with virtue. 

And yet the very weaknesses inherent in both of 
these theories reveal a certain value in competition as 
well as in co-operation from which the world might 
profit. Competition may suppress the weak and 
undermine morality, yet it selects the strong ; co-opera- 
tion may reduce individuals to an undesirable dead 
level, yet it tends to preserve society. In short, each 
supplies what the other force lacks. Competition de- 
velops strong men, but it offers no guarantee that these 
"fit" men will not destroy society and undermine moral- 
ity by ceaseless warfare among the strong. Co-opera- 
tion acts as a preservative force without any attempt at 
a selective process. Individualism spells selection; col- 
lectivism connotes preservation. Competition implies 
progress; co-operation aims at race conservation. If we 
discover a proper union of these two forces we shall 



SOCIAL LIMITATIONS OF COMPETITION 67 

have a society that shall not be sacrificed at the behest 
of progress, and conservation will harmonize with de- 
velopment. 

As race preservation must precede development in 
economic life, so we must establish some form of co- 
operation, of collective activity, to serve as a limitation 
on the competitive struggle among individuals. How 
far shall that co-operative system extend ? Only so far 
as it is an essential instrument for the preservation of 
the race, the community or the social group. Once we 
have been reasonably assured of the continued exist- 
ence of a certain society, and have so established it as 
to prevent it from sinking below a certain level, we can 
safely permit the competitive struggle for existence to 
weed out the unfit and to select the best. 

From this point of view, "mutual aid" is simply the 
application of the principle of "survival of the fittest" 
to group existence as distinguished from individual life. 
Animals, unconsciously, recognize the necessity for 
group co-operation in order to preserve themselves. 
Wolves hunt in packs; birds fly in flocks; sheep herd 
together; and men organize themselves in trade unions 
and establish trusts. Thus, co-operation is only another 
means utilized towards the end, survival, in the strug- 
gle for existence. In order to succeed within the group 
it may be necessary for the individual to engage in a 
fierce competitive struggle, but to preserve the group 
itself it may be necessary to co-operate in a society that 
will protect the weak and preserve and increase the 
quantity as well as the quality of the individuals com- 
posing the social group. "Mutual Aid" is only another 
phase of the struggle for existence — group survival as 



68 THE SOCIAL COMMONWEALTH. 

distinguished from individual survival — in which co- 
operation supplants competition as the factor of prime 
importance. (In fact, it was only some followers of 
Darwin who began to use the term "competition" as 
synonymous with "struggle for existence," while the 
father of the theory of evolution would never deny that 
co-operation may be a potent influence in the struggle 
for existence). In any event, "mutual aid" extends 
only to groups, and it may imply a certain amount of 
co-operation within the group as a preparation for 
fiercer competitive struggles with other social groups. 
Darwinists may then claim that such co-operative ef- 
forts within society are only training schools for a 
larger competitive struggle for existence in the world 
drama. 

Competition and co-operation are both abundantly 
illustrated in nature, and they must both be utilized by 
man, if he is to achieve the highest ends of life. Our 
contention is simply that the proper proportion of these 
two great forces would present an arrangement zvhcre- 
by each society, state or nation would adopt at least 
that amount of co-operation which will secure a level 
below which the competitive struggle for existence will 
not be permitted to sink. 

"Mutual Aid" is essential, likewise, in order to pre- 
serve cohesion and strength of the social group in con- 
tests with rival civilizations. France has her German 
peril, Turkey fears the tread of the Russian bear, Cali- 
fornia clamors for a Chinese exclusion act, while Eu- 
rope and America are ill at ease because of the possibili- 
ties of a "Yellow Peril" in the awakening of China. 
Under such circumstances, it is important to remember 
that a strongly organized social group, based upon a 
careful system of co-operation, may sometimes triumph 



SOCIAL LIMITATIONS OF COMPETITION 69 

over a state possessing many strong individuals but de- 
ficient in the spirit of co-operation, just as a well trained 
army of diminutive Japanese may conquer a motley 
crowd of huge Russian Cossacks. 

The Industrial Revolution has revolutionized the 
entire individual and social life, for it has imposed on 
mankind a nerve-racking chase for survival and success. 
All nations must, sooner or later, feel the burdens of 
unrestricted competition, even as England is the first to 
suffer because she has been the pioneer in the Industrial 
Revolution. England has been warned by some of her 
great scientists that the fierce competitive struggle 
waged on the island which first adopted the results of 
the industrial revolution is liable to become the chief 
factor in race deterioration. Measurements of height, 
muscular development and weight seem to indicate that 
the Englishman is beginning to lose his old time virility. 
The example of Great Britain should be sufficient proof 
that co-operation is an essential element in the struggle 
for existence — co-operation must be the supplement of 
competition in order to safeguard civilization and pro- 
mote progress. 

To insure the survial of the "best" in each race we 
must adopt some restriction upon our ruthless competi- 
tive system of industry, that will prevent the individual 
from sinking to the level of the "submerged tenth/' 
Socialism would do this by abolishing outright the com- 
petitive system of industry, and constructing on its 
ruins an idealistic co-operative society. .This might 
serve the purpose of protecting the weak, but it might 
cripple the strong. The path of true progress must lie 
between the extremes of Socialism and Individualism, 
and must combine the competitive system of industry 
with some efficient form of group co-operation. 



70 THE SOCIAL COMMONWEALTH. 

2 — Voluntary Socialism. 

The plan of "The Labor Commonwealth" achieves 
this end by rearing an institution which will compete 
with the competitive system of industry itself for rais- 
ing the plane of individual life and for safeguarding 
race virility. Hitherto, competition has been the prime 
factor in reducing cost of production, and, incidentally, 
of lowering the standard of life. A system of co-opera- 
tive labor colonies will limit present day industrialism 
for the purpose of elevating the standard of living and 
securing a fair wage for all willing workers. The 
difference is not merely one of degree. It is a difference 
in the kind of competition, for the co-operative colonies 
will consist of a group of laborers, united in a co-opera- 
tive society to compete with the outside world. 

It might be urged, with some semblance of justice, 
that the creation of such self-sufficing economic units 
would mean a return to the earlier forms of economic 
development. It would do away with the world market 
and substitute for the world-wide organization of in- 
dustry a comparatively simple form known even to the 
Ancients. A sceptic might declare : "This is retrogres- 
sion. You would have us go back to a form of indus- 
trial life familiar to the city states of Greece. You 
would have us unlearn the lesson of the Industrial Rev- 
olution, and carry us back to the realm of mediaeval 
feudalism, in which each locality produced its own 
necessities of life." 

Such an argument implies that we have made 
great progress in economics during the last century, 
and that the adoption of the principle of economic self- 
sufficient units would mean the voluntary surrender of 
the gains already secured. I do not question the value 



SOCIAL LIMITATIONS OF COMPETITION 71 

of the great achievements of the Nineteenth Century, 
but we must not be blind to the dangers of unemploy- 
ment and poverty that seem to go hand-in-hand with 
advancing civilization. If we can devise a method of 
eliminating unemployment and reducing poverty to a 
minimum, we need not be troubled about any cry of 
"retrogression." 

In fact, hitherto we have had no test for progress in 
economics. We have assumed, a priori, that progress 
is synonymous with complexity — complexity in eco- 
nomic organization, diversity in economic life and in- 
crease in products. Without attempting to question 
this hypothesis, we might be permitted to urge that 
complexity, in and of itself, is not progress, altho it 
usually accompanies true progress. If progress is 
bought at the price of poverty, we might conclude that 
the world is losing in the transaction, and that it is 
time to revise our definition of progress. If the pro- 
gram of self-sufficient co-operative labor colonies be 
viewed as a cry of "back to nature/' then it might be 
profitable to go back to the primal forms of economic 
organization in order to safeguard society and protect 
the citizen from poverty and unemployment. In short, 
a system of labor colonies offers the opportunity of test- 
ing progress, of ascertaining the value of our complex 
economic system. These colonies will prove, at the 
same time, the barometer and the safety-valve of our 
industrial system. They will indicate the amount of 
pressure on the "submerged tenth," and they will offer 
a "land vacuum" where such unemployed may earn 
their own living by the sweat of their brows. Further- 
more, the labor colonies will measure the amount of 
true progress by showing just how many workers are 
discarded by our progressive economic system- It will 



72 THE SOCIAL COMMONWEALTH. 

offer to these men, who are unable to adjust themselves 
to our economic system, a haven of refuge in self-suf- 
ficient labor colonies. If this be criticised as a retro- 
gressive movement, then let us answer that we re- 
serve our labor colonies only for those who have found 
no place in our progressive society — we apply the 
"natural" and primeval method of economic organiza- 
tion only when, and only in so far as, the highly devel- 
oped modern economic system proves inadequate. We 
limit our progressive industrial system only in so far 
as it may be necessary in order to abolish poverty and 
eliminate unemployment. The "Labor Colonies" will 
prove to be the protective tariff wall for all laborers, 
for they will eliminate from competitive industry the 
wage-slaves who furnish the nucleus for the submerged 
tenth. To these unfortunate misfits of civilization they 
will offer the alternative of employment in a co-opera- 
tive society that will insure to each member the neces- 
sities of life, and secure for the more thrifty and effir- 
cient some of the luxuries of life, proportionate to the 
economic surplus that they will have accumulated. 

A chain of "Co-operative Labor Colonies," united so 
as to comprise a self-sufficient economic unit, might be 
called a Socialist Community. We would then have 
the interesting experience of a Socialist Society limiting 
the so-called capitalistic system of industry, so as to 
secure a "living wage" and fair treatment for all labor- 
ers. There is, however, one large distinction between 
a system of Socialism and a group of co-operative labor 
colonies for the unemployed and underpaid. The first 
is coercive. It may be the beneficient coercion of a 
father in correcting an erring son, but there is no 
acceptance of these conditions by the individual judg- 
ment. The system of labor colonies, on the other hand, 



SOCIAL LIMITATIONS OF COMPETITION 73 

is purely and solely a voluntary system — we may call it 
Voluntary Socialism — which the individual laborer may 
join or ignore. 

Socialism may be compatible with despotism — as the 
German State Socialism of Bismarck, if fully devel- 
oped, might prove to be. But voluntary colonies of 
laborers for improving their condition and safeguard- 
ing the standard of living of the entire nation is the 
true complement of political democracy. Such co-op- 
erative colonies, in contradistinction to any coercive 
Socalistic organization of society, would form the cor- 
nerstone of an Industrial Democracy, existing by the 
side of our Political Democracy. 



PART II. 

THE INDUSTRIAL COMMONWEALTH. 

(A Plan for the Self-Regulation of Industry.) 



CHAPTER VII. 
Individual Liberty and State Interference. 

i — Laissez-faire and Industrial Freedom. 

Several years ago, a member of the United States 
Senate, in the midst of a heated discussion on the Al- 
drich Currency Bill, dramatically announced that he 
held in his hand a list of names of men, numbering less 
than one hundred, who, by their enormous financial 
power, controlled the industrial life of the nation. How 
would the old theory of laissez-faire (transformed into 
the American expression, "let-well-enough alone") 
stand the test of practical application under such con- 
ditions ? An. industrial aristocracy is speedily becoming 
the master of our political democracy and may soon 
wield its powerful arm over America's free and inde- 
pendent citizens. 

True, this aristocracy may evolve a system of benev- 
olent despotism. The railroads and street railways, 
the natural monopolies such as coal mines and gas 
wells, the manufacturing establishments and even the 
food supply may be the vested interests of a coterie of 
generous men. They may give us libraries and col- 
leges, churches and technical schools. Despotism is 
always measured by its artificial structures — its only 
strong claim for justification. True democracy is meas- 
ured by its influence on men, and by what it makes of 
human beings. The splendor of the "Golden Age" of 
Rome, when Augustus Caesar was the benevolent des- 
pot of the civilized world, is a shallow display when 
compared with the glories of Democratic Athens in the 
Age of Pericles. For a benevolent industrial despot- 
ism may take proper care of our bodies, may supply our 



78 THE SOCIAL COMMONWEALTH, 

physical wants, and (to a certain extent) our intellect- 
ual needs, but it will make slaves of freemen, even 
though the outward forms of democracy be preserved. 
Under such conditions individual liberty would consist 
of those rights which the industrial despots, in their 
beneficent wisdom, might see fit to bestow upon the 
mass of their countrymen. 

With the modern tendencies to the concentration of 
capital and the consolidation of labor, and under con- 
ditions of modern life which are continually calling 
for mass play, a policy of "laissez-faire" would result 
in the coercion of the weak and the unorganized by the 
strong and organized. The state with an extreme 
"laissez-faire" policy would invite the rule of the Clevel- 
and unscrupulous in the industrial world — just as in 
the savage state we have the dominion of the physically 
strong. An oligarchy resting on consolidated wealth 
would revive the Empire of the Caesars under the emp- 
ty forms of Consuls, Tribunes and Senate, of Presi- 
dents, Governors and Congress. The principle of "lais- 
sez-faire," applied to modern economic conditions, 
would produce Caesars of finance who would not scru- 
ple to imitate the careers of the despots of the Eternal 
City. It would give to an association of financial mag- 
nates sovereign power — the poiver to coerce their fel- 
low-men. 

If the alternative to an extreme "laissez-faire" pol- 
icy would be only Socialism, no sane man should hesi- 
tate to accept the latter. "Laissez-faire" means the co- 
ercion by irresponsible captains of industry, whose mo- 
tive is personal profit. Socialism means the coercion by 
governmental authority (of representatives selected by, 
and responsible to, the majority of citizens). Accord- 
ingly, there must be more freedom under a Socialistic 



INDIVIDUAL LIBERTY 79 

organization of a community than in a trust-beridden 
country, controlled by a small group of capitalists. 
Somewhere between Socialism and the theory of 
"laissez-faire" must be the "happy middle course" 
which will secure the greatest freedom for the individ- 
ual at the present time. Just where this course lies is 
the question dividing political parties not only in the 
United States but in nearly every civilized country. 

This brings us directly to the question of State In- 
terference—the most difficult problem of constitutional 
law, the question that continually vexes the mind of 
the political philosopher. It is the supreme problem of 
Political Science. The question how far the state 
ought to interfere with the conduct of the individual 
citizen, how far it should limit the scope of his inter- 
ests, has ever been most important. But with the open- 
ing of the industrial revolution in the latter half of the 
Eighteenth Century, it has become also the most com- 
plicated political and social problem of modern times. 
Throughout the Nineteenth Century, the theory of 
"laissez-faire" struggled with the Socialist ideal of a 
minutely regulated commonwealth, and in the first 
decade of the Twentieth Century such questions as 
Railroad Rate Regulation, the Conservation of Natu- 
ral Resources and the proper control of Public Utili- 
ties prove that questions of State Interference are up- 
permost in the minds of men. 

Indeed, the history of the last century and a half 
shows repeated efforts made decade after decade to 
define the scope of State Interference. Each age en- 
deavors to settle this question according to its own 
light, only to find it reversed in the succeeding years. 
For, State Interference must ever remain a problem 
for each generation to solve anew, guided by its own 



80 THE SOCIAL COMMONWEALTH. 

light under the peculiar conditions of the times. There 
is no charmed circle around individual rights which 
may not be crossed by state interference. Liberty is 
not a static term but a dynamic concept — "A path of 
progress/' Individual liberty is not a negative term 
but a positive power, and the states may do much to 
enhance that power by enlarging opportunities and re- 
moving the burdens from the less fortunate in the 
struggle for existence. 

In any existing society, it is next to impossible to 
determine impartially the question of State Interfer- 
ence. Is any particular extension of government en- 
deavor in the United States beneficial to the people and 
conducive to true individual liberty ? The moment the 
question is put we have the diverse answers not only of 
unprejudiced scientists, but also the insidious attempts 
to befog the issue on the part of certain classes (com- 
monly called the "special interests"). In any discus- 
sions of the tariff question in the United States or the 
Lloyd-George Budget in England, there are men, pow- 
erful money kings, whose interests will be directly af- 
fected by the decision. Naturally, strong pressure is 
brought to bear and the victory of reform is usually 
but a compromise. A complete program of social re- 
form, affecting the amelioration of the condition of the 
poorer classes in the social order, must meet the pow- 
erful opposition of vested interests. We have but to 
recall the "June days" of 1848 in Paris and the estab- 
lishment of the French Republic in 1871 to understand 
how difficult is the task of the social reformer in mod- 
ern states. In short, wherever and whenever any steps 
in social evolution tend to jeopardize the profits or the 
privileges of our so-called upper classes there is a con- 
flict which retards social progress. 



INDIVIDUAL LIBERTY 81 

While there should be a sphere of individual activity 
into which the state ought not to intrude, this is not a 
fixed territory, but must be determined on this question : 
What is it necessary for the State to do or abstain from 
doing, in order to achieve, for all of its citizens, the 
greatest possible amount of true individual liberty? 
What is "true individual liberty" ? Nothing more nor 
less than opportunity — the largest amount of oppor- 
tunity for self-development, for bringing forth the best 
that is in each man, for "self-realization." The high- 
est form of liberty is the opportunity given to the in- 
dividual for as complete a development of self as na- 
ture will permit under any given set of conditions. As 
these conditions change, the concept of liberty must re- 
ceive different interpretations from time to time. 
Ritchie, in his valuable discussion of the "Principles of 
State Interference," gives clear expression to such a 
view : "The State has not merely the policeman's busi- 
ness of stepping in to arrest the wrongdoer, not the sole 
function of ruthlessly enforcing the fulfillment of con- 
tract, whatever these contracts may be and between 
whomsoever made; but the duty of providing such an 
environment for individual men and women as to give 
all, as far as possible, an equal chance of realizing what 
is best in their intellectual and moral natures." 

Ritchie criticizes Herbert Spencer for his adhesion 
to a policy of extreme "laissez-faire." Spencer, he 
says, confounded two different results. "The other 
day," says Ritchie, "we were pulling down an old pal- 
ace and an old prison; to-day we are building a school 
and a library." "Laissez-faire" is the proper method 
for securing the first, but may be altogether inappro- 
priate in achieving the second. "Compulsory educa- 
tion," says John Stuart Mill, "may be regarded as in- 



82 THE SOCIAL COMMONWEALTH. 

terference with the liberty of the parents, but it is in- 
terference in behalf of the child." 

In the past, particularly in American history, the 
state has been viewed only as a juridical institution, 
organized and existing solely for the purpose of dis- 
pensing justice among many warring individuals. The 
chief function of the state was to settle disputes and 
guarantee free play for a struggle of existence in which 
"the devil takes the hindmost." Liberty was regarded 
as a state of non-interference with the plans and acts 
of "supermen" in industry and finance. Any attempt 
on the part of the state to protect the weak (who though 
weak in economics may be strong in intellect and mor- 
als) in the battle of life was regarded as a dangerous 
paternalism. Even poverty was extolled as a virtue, 
for did it not tend to* bring forth hardy men and self- 
reliant citizens? Needless to say, such arguments were 
presented by those who were blind to the cringing 
forms that are the products of poverty. 

Gradually, our views on state interference are being 
transformed. The state is no longer regarded merely 
as a legal system with an appendix, known as a police 
force, to enforce the decrees of the court. We know 
now that we can utilize the state as a power for the 
self -development of society as well as for the self -real- 
isation of the individual. We are convinced that the 
state, by regulating and controlling our industrial sys- 
tem, may offer us far more liberty than we have to- 
day. Herbert Spencer pictures the happy freedom of 
the savage, who owes no allegiance to Parliament, with 
its statutes and its senseless interference in the activi- 
ties of the individual citizen. But a careful critic re- 
minds us that the poor Englishman, living under a 
government ruled by many volumes of the revised 



INDIVIDUAL LIBERTY 83 

statutes, has far more liberty than the Australian Bush- 
man or the Savage of the South Seas, who are for- 
ever in fear of starvation and murder. 

Not by casting off all the bounds of law, but by in- 
creasing state activity for the protection of our eco- 
nomic life and for increasing our common- wealth, can 
we approach true liberty. 

And so we are learning that poverty, unemployment 
and all the conditions that are unfavorable to the phys- 
ical development of man are limitations upon true lib- 
erty. They are forces of coercion that set bounds to 
the self -development of the individual, for they deny to 
him the opportunities for physical and mental growth. 

2 — Minimum Wage and Maximum Price, 

The leaders in modern thought have come to realize 
that there are certain physical conditions indispensable 
to true liberty. Just in so far as a dweller of a city 
slum has been deprived of opportunities, which he 
might have had under a better social system, he is not 
free — he is a slave to the social system of his day. The 
frugal and industrious employee in a sweat-shop, who 
must run his machine or face his starving family, is not 
legally a slave. Legal slavery has been abolished by the 
Civil War. But he is in fact a slave — chained to his 
environment and a serf to his machine. He may not be 
the "vested interest" of some individual, but he is very 
often the chattel of our economic system, the possession 
of a metaphysical entity called "the corporation," 
which, to use a pregnant legal phrase, "has no soul." 

Before the Civil War, the lawyers and merchants of 
the South invoked the Constitution for the protection 
of their vested interests, of slaves acquired by the sweat 
of their brows. It may have seemed necessary to make 



84 THE SOCIAL COMMONWEALTH, 

slaves of a part of the population in order to secure the 
liberty of the remainder. This was the condition in the 
Athenian Democracy. The South, too, was convinced 
that its welfare and the liberty of the white population 
depended on the slavery of millions of negroes. And 
if there be those who< are convinced that we must have 
economic slavery to-day in order to secure the freedom 
of "the better half/' let them admit that it is slavery. 
Let us cease to hear the cry of captains of industry for 
the protection of their vested rights and vested wrongs 
by innocent appeals for the freedom of contract. 

The negro slaves of half a century ago worked in 
healthful fields, received rations and secured rude huts 
for shelter. The white slaves of our city slums to-day — ■ 
probably exceeding in number the Negroes before the 
Civil War — should be thankful for the immunities 
which they enjoy and of which the downtrodden negro 
was deprived. But the "submerged tenth" are not less 
slaves because for the fields of cotton have been substi- 
tuted unhealthful factories, and, for the rations and 
huts of the negro, a pittance of wages. Such men are 
not free unless freedom be compatible with slavery. 
They lack the essential ingredients of liberty — oppor- 
tunity and the power to change their position. Depend- 
ent on others for mere physical existence, how can they 
be free in the higher things of life? 

Professor Simon Patten has constructed a valuable 
argument based on the principle that true freedom is 
incompatible with poverty. To him, the most hopeful 
sign of our civilization is the fact that we have a great- 
er amount of capital, a larger surplus with which to 
satisfy our physical needs, than former ages had. Civ- 
ilization and progress are the superstructures resting 
on the foundation of this economic surplus. The 



INDIVIDUAL LIBERTY 85 

beauties of art and the wonders of science are possible 
because we are freed, to some extent, from the deaden- 
ing power of physical needs. In accordance with this 
logical proposition, the aim of society should ever be to 
increase the economic surplus and to endeavor to re- 
lieve the individual citizen, in so far as possible, from 
the tyranny of physical want. In the province of art, 
religion, morals and taste, the state should not inter- 
fere with the freedom of the individual; but, at the 
same time, in order to promote this freedom and make 
of it more than a mere hollow phrase, it must be the 
main function of government to increase the economic 
surplus in the nation and to secure the independence of 
the citizen from the material needs of existence. So- 
cialism and laissez-faire must be judged solely from the 
point of view of utility. That economic system is just, 
equitable and desirable which will enable the nation to 
realize a larger economic surplus, so distributed as to 
open better opportunities for the fulfillment of the 
higher desires and motives in the life of the nation and 
the citizen. 

Such considerations form the logical basis for the 
proposition to establish a "Labor Commonwealth' ' in 
the Uinited States, with Federal co-operation, for the 
protection of wage-earners. It will serve as a haven 
of refuge for the unemployed, and will safeguard the 
standard of living of the entire community by auto- 
matically fixing a minimum wage in industrial life. 
Undoubtedly such a Commonwealth is of vast import- 
ance to labor and to the community at large. It will op- 
erate as a conservative force, preventing our population 
from sinking below a certain level. And yet, the estab- 
lishment of labor colonies for the unemployed and the 
adoption of numerous "labor bills" in Congress and 



86 THE SOCIAL COMMONWEALTH. 

state legislatures, however beneficent such reforms will 
prove, do not present a comprehensive remedy for the 
defects in our industrial system. They view our eco- 
nomic system from the standpoint of the laborer, and 
while the proposed remedies may be efficient, still they 
leave open the problem, in so far as the laborer is 
affected as a consumer, by the growth of trusts and the 
operations of consolidated wealth. 

To put the matter concretely : it is insufficient if we 
obtain merely employment and a minimum wage for 
the worker, so long as we permit extra-government 
groups of capitalists to fix the maximum price for the 
necessities of life. Any scheme for securing employ- 
ment and maintaining a fair standard of living among 
workers is important for the protection of the laborer 
and operates to safeguard the poor from sinking below 
the level of a wage-slave. But a comprehensive plan 
for industrial reformation must be something more 
than a mere conservative force tending to preserve the 
vitality of the worker and insure him a decent, living 
wage. It should throw open the doors of progress, and 
facilitate a union between preservation and advance- 
ment. It should aim to obtain for the laborer more of 
the rewards of industry, while retaining for him the 
high standard of life of a free and independent wage- 
earner. 

How can this be accomplished? What steps are 
necessary in order to secure for the wage-earner the 
benefits due him as a consumer over and above those 
he should receive as a producer ? Shall the State or the 
Federal Government attempt to regulate prices, to re- 
incorporate in modern industry the mediaeval system 
of minute regulations — the weight of bread, the qual- 
ity of cloth and the price of grain? The problem is 



INDIVIDUAL LIBERTY 87 

far more than a question merely of economics. It 
looms up as a serious problem of politics and opens up 
the whole question of state interference. 

What are the necessary steps in the establishment of 
a middle course that will guide us safely past the 
dangers of a society organized for profit and stimu- 
lated by greed, and a system of state coercion that may 
prove to be only another name for slavery? The 
general principle underlying an organization that 
would avoid these two extremes must be analogous to 
what has been outlined in Part I. We must create an 
institution which w 7 ill compete with present day indus- 
trialism in order to reduce the cost of living; we must 
create a People? f s Corporation which will endeavor, 
constantly, to decrease the cost of the necessaries of life 
— which will automatically fix a maximum price for* 
consumers whereas the Labor Commonwealth will 
secure a minimum wage for laborers. 

3 — Liberty and Coercion. 

Most economists agree that we must have some form 
of regulation of our industrial system by the sovereign 
power in the nation, even though such government 
regulation implies the exercise of coercion by the state. 
On the one hand, we have those who would have us 
destroy trusts, dissolve huge corporations and reduce 
industry to the old competitive basis. This is a kind 
of negative regulation that is favored by those who 
still cling to some of the formulas of "laissez-faire." 
On the other hand, "Progressives," who claim to be 
advanced students of modern industrialism, demand 
that the government shall not destroy large combina- 
tions, but control and regulate them by government 
commissions, supervisory bureaus and the issuance of 



88 THE SOCIAL COMMONWEALTH. 

licenses. (Such a view of positive regulation is in 
harmony with the history of industrialism prior to the 
publication of the "Wealth of Nations" and is voiced 
usually by those to whom a "Protective Tariff" is 
acceptable). Socialists are the most radical "progres- 
sives," for they would have us go the full limit of 
positive regulation, so that our policy would include not 
only control of our industrial system but also ownership 
and operation of all the social tools* of production. 

The theory of the Single Tax presents a third view 
of state interference that ought to have a strong appeal 
to all Americans. The followers of Henry George 
argue that by their peculiar method of taxation the 
whole industrial system will become self-regulative. 
We are not now interested in the correctness of that con- 
clusion. But it gives us an important concept — the ideal 
of a society controlled and regulated, automatically, 
in its industrial activities. This is a view of self-regu- 
lation far removed from political coercion and implying 
a method of voluntary adjustment that should obtain 
the sanction of those who fear the coercive power of 
the state. Irrespective of whether we agree or disagree 
with the principles of the Single Tax, this attitude on 
the question of state interference is, I am convinced, the 



* Some Socialist leaders use the term "Social tool'* to 
impress the reader with the fact that "collective ownership" 
will not include "a large number of purely individual trades 
and callings which would continue to be exercised by pri- 
vate individuals or concerns in competition with each oth- 
er — so long as their operation does not involve the exploita- 
tion of labor." (Hillquit) This definition would imply that 
the Socialist state would take over all modern machinery 
and all the costly tools that are part and parcel of the fac- 
tory system, while an unimportant fringe of individual tools 
would be permitted in the hands of independent carpenters, 
cobblers, plumbers, etc. 



INDIVIDUAL LIBERTY 89 

safe middle course that retains all that is valuable in 
both negative and positive state regulation. 

From one point of view, indeed, there is a strong 
objection that may be urged against extensive siate 
interference. It is the argument that has been usca 
repeatedly against Socialism, when we are told that 
Socialists would simply substitute the coercion of ma- 
jority rule for the tyranny of captains of industry. 
Fundamentally, this argument is the stronghold of 
Anarchism, which denies the right of coercion to any 
group of people, however large. 

The philosophy of Anarchism, however grotesque its 
manifestations may be among ignorant devotees of 
high sounding phrases, has at least one strong logical 
basis. Thoreau and Tolstoi both repudiated the right 
of taxation on the part of the state; and, undoubtedly, 
from the point of view of logic, they were correct in the 
deduction that they could not justly be forced to pay 
taxes to a state to which they had refused to swear 
allegiance and whose benefits they were willing to fore- 
go. The logical anarchist will say : I was brought into 
the state by birth and was made a member of the com- 
munity without my consent. Must I then forever be 
denied the right to shift for myself? Must I remain 
an unwilling subject of a state whose advantages I do 
not seek ? Have you the right to force me to pay taxes 
to support an institution from which I am only too 
willing to withdraw? 

It has become fashionable nowadays to laugh to 
scorn the social contract theory of Rousseau and his 
followers, and to assume that government must be inde- 
pendent of contractual obligations on the part of its 
subjects. It is true that modern governments are not 
the creatures of a contractual relation, nor will history 



90 THE SOCIAL COMMONWEALTH, 

support any such claim. But is it not possible to estab- 
lish a community through a social contract, voluntarily 
entered into, by an aggregate of individuals who desire 
to establish a new Commonwealth? Such a contract 
may never have been drawn up in the past, but it is 
conceivable that communities, as voluntary institutions, 
may play an important part in the future of our race. 
The government of to-day, in so far as most of its 
subjects are concerned, is an involuntary superstruc- 
ture far from the ideal "consent of the governed/' but 
there is always the possibility of a great community 
formed as a voluntary institution and resting on t.he 
basis of consent of its members. At present, men are 
born into the political state and are tied to it as sub- 
jects and citizens, irrespective of their opinions. Natur- 
ally, therefore, the conservative element in the popula- 
tion must ever look with suspicion upon any extension 
of state activity and authority over the fields formerly 
left free for individual initiative, since such state inter- 
ference appears as an outside force to limit the opera- 
tions of the citizen. There will always remain a party 
strongly opposed to the extension of government activ- 
ities, so long as the state is viewed as an organism 
which may grow by feeding upon "individual liberty." 

The Industrial Commonwealth, that will operate as 
a People's Corporation for controlling and regulating 
the cost of living, must be a voluntary institution, free 
from, the taint of government coercion. It will not 
assume exclusive control of all industry and economic 
life (as Socialism, would have us do), but it will com- 
pete with individual initiative itself for the purpose of 
establishing a certain reasonable maximum price for the 
necessaries of life. 

In conclusion, let us realize this vital distinction be- 



INDIVIDUAL LIBERTY 91 

tween the Social Commonwealth and the theories of 
Socialism and Anarchism. The latter refuses to sanc- 
tion any organization except one that is built on the 
principle of absolute voluntary co-operation. Its oppo- 
sition extends not only to Economic Socialism but to 
the smallest political activities of the State, because the 
latter is not a voluntary institution. 

Socialists go to the other extreme and demand thai 
the function of the State — the Political Institution — 
shall be extended until it includes the major economic 
activities of the inhabitants. The Social Common- 
wealth presents the middle course that woidd utilize 
that part of the truth which is in Socialism and Anarch- 
ism. We accept the State as a political necessity -- 
although we shall endeavor constantly to keep its coer- 
cive powers within limits compatible with freedom and 
democracy. But we shall construct a new institution — 
a voluntary co-operative association — to safeguard the 
economic interests of the people. 



CHAPTER VIII 

Socialism and the Economic Surplus. 

i — A Socialist State. 

It is a fitting matter for curious speculation that 
after half a century of agitation, discussion and modi- 
fication. Socialism has never yet presented a practical 
scheme comprehending a consistent policy for achieving 
the objects of its existence. Some see in this circum- 
stance the impracticability of Socialism, which, they 
declare, must ever remain an unrealizable ideal — a 
pleasant dream. Yet, if we examine carefully some 
important economic factors, we must conclude that 
Socialism may easily become an accomplished fact in 
one or more of the United States. Furthermore, it may 
be put into practice in some portions of our country in 
the near future, so that if we have any quarrels with 
Socialism we must battle now with the ideal and with 
the dream, and not wait until circumstances shall have 
made the dream a reality. 

To understand that Socialism may readily become an 
accomplished fact, let us suppose that one of our multi- 
millionaires becomes a strong adherent of the Socialist 
movement — not an improbable thing in this day of 
"Parlor Socialists." Our Kings of Finance are seeking 
for larger provinces in which to exercise their powers. 
Having taken possession, to a large extent, of the eco- 
nomic world, they are seeking for other worlds to con- 
quer. As a consequence, we have not only the "Oil 
King" and the "Steel King," but likewise the "Hospi- 
tal and College King" and the "Library King." Indeed, 
one financial monarch, at his death, left an estate which 



94 THE SOCIAL COMMONWEALTH, 

is administered, practically, as a social reform fund. Is 
it too much to expect that some youthful conqueror in 
the world of finance, a man in whom a high love for 
humanity will be united with a spirit of achievement, 
will, ere long, grasp the opportunity to make himself 
the Napoleon of Socialism ? Assuming that our young 
hero will have at his disposal a fortune of two hundred 
million dollars ($200,000,000), secured by lucky ven- 
tures in the field of finance, or by becoming the heir of 
several of our richest trust magnates, he would have 
sufficient capital to destroy the capitalistic system in 
several states. With carefully laid plans he could, in a 
short time, buy outright all the real estate and all the 
machinery in any one of the following states : — Wyom- 
ing, Nevada, Arizona and New Mexico in the West; 
or Vermont, Delaware, and Florida in the East. 

If we assume that such wealth and power would not 
serve to instill a love for luxury and self-satisfaction, 
but would act rather as a spur for the realization of 
Socialist dreams, our Napoleon of social reform might, 
by one generous donation, transfer all his wealth to the 
state. The result of such an act would be the institu- 
tion of a Socialist State, in absolute possession and con- 
trol of all real estate and machinery within its borders, 
and having the power to regulate the entire industrial 
system of the State, through the action of the legisla- 
ture and governor. Such a community (after the 
adoption of woman suffrage) w r ould represent the 
largest amount of democracy conceivable, since it would 
mean the union of political and social democracy. In 
true Socialist fashion, we might expect the state to 
apportion work, and the legislature to prescribe the 
hours of labor and the methods of payment. 

We might then have the spectacle of the gradual 



SOCIALISM AND THE ECONOMIC SURPLUS SK 

introduction of communism, for the demands of the 
populace for "equal pay" would soon be conceded by a 
subservient legislature or an equally subservient Board 
of Directors elected by the Citizen-Shareholders of the 
State. But, at this time, we are not concerned with the 
results of a communistic scheme, and will consider the 
consequences of the establishment of a Socialist State, 
irrespective of the details and regulations as to wages 
and salaries.* 



* While there is no inherent difficulty in the establishment of 
such a communistic scheme, the obstacles against which such a 
state would have to contend afterwards is quite another matter. 
First, it would alter the very principles of our democratic insti- 
tutions, and bring vividly to mind the essential difference between 
communism and democracy. The former aims to level all 
ranks. It recognizes no class distinctions and looks forward to 
a time of equality of condition. True democracy, on the other 
hand, while it places the stamp of disapproval on invidious class 
distinctions, recognizes the true worth of the individual. To do 
this it must classify men with respect to the rewards offered for 
industry, loyalty and ability. Democracy aims primarily to give 
each man an equal opportunity for self-realisation, leaving each 
individual to work out his own salvation. It concedes that the 
valuble prizes to be won in the race of life should go to the 
strongest and the swiftest, but it seeks to obtain for each man 
a fair start and to remove from humanity the handicaps of 
special privilege. In short, while communism aims at equality 
of condition, democracy desires simply equality of opportunity. 

It has been suggested that there can be no true equality of 
opportunity, for the rich man's son always has opportunities that 
are closed to one who springs from the common people. We 
might answer that certain conditions — the life of ease and luxury 
that goes with large wealth — while they may appear highly de- 
sirable to those who must toil for their daily bread are not 
always conducive to the best interests of the individual. Instead 
of presenting opportunities in excess of those offered to the 
middle classes, they are often unfavorable conditions which the 
rich man must live down. In short, we cannot establish absolute 
equality of opportunity for the very good reason that what may 
prove to be opportunities for one man are dangerous stepping- 
stones for another. Oliver Goldsmith was unable to do any 
work of value so long as he lived in conditions of ease and 
comfort, but when the pinch of poverty forced him to exert all 
his efforts for the earning of a bare livelihood, he wrote his 
masterpiece — the "Vicar of Wakefield." On the other hand, 



96 THE SOCIAL COMMONWEALTH. 

However beneficent such a state Socialism, might 
prove, it would still be open to the serious objection 
urged by Thoreau and Tolstoi. From the point of view 
of logic and philosophy, such a state would be only 
another form of tyranny and despotism., for the state 
would exercise coercion, made necessary by a division 
of its labor among individual citizens — many of whom 
might not be satisfied with their assignments. Recently, 
we have had a spectacle of such coercion that should 
make us pause before leaping headlong into every 
scheme of State Socialism. Not very long ago the 
workingmen on the French railways, that are owned 
and operated by the state, went out on strike, and the 
government had the alternative of utilizing the methods 
of captains of industry in breaking strikes or of co- 
ercing the workingmen in order to maintain the public 
service. The difficulty was aggravated by the fact that 
the Prime Minister, Briand, was himself a Socialist 
and, presumably, in sympathy with the workingmen. 
Yet, as the head of the Government, he felt bound to 
use all the powers of the state — even the force of mili- 
tarism that is so distasteful to Socialists — in order to 



Frederick the Great would probably never have gained his sur- 
name but for the fortunate fact of being born the son of a king. 
We cannot, therefore, speak of absolute equality of oppor- 
tunity — for, indeed, this might be equivalent to equality of con- 
dition. But there should be a certain minimum of opportunity 
that must be equally accessible to all, if we are to have a true 
democracy. Some may have conditions more favorable, but alt 
must have a certain measure of opportunity if democracy is to 
be more than a mere name ; and such opportunities would in- 
clude equal access to education and the assurance of employ- 
ment at a living wage. We have no right to restrain a. father 
from adding, for the benefit of his children, other opportunities 
gained by a life-time of effort and toil. But we must under- 
take to supply all the children of a democracy, in equal mea- 
sure, with the elementary and necessary opportunities fer a 
valuable life. 



SOCIALISM AND THE ECONOMIC SURPLUS 97 
keep open the means of communication for the French 
people. It is the irony of history that the hand of a So- 
cialist should be employed to suppress a large working- 
men's organization and to utilize coercion in the opera- 
tion of a state industry. And yet it is appropriate that 
a Socialist, though unwillingly, should illustrate the 
coercion that a state must occasionally undertake in 
business enterprises, if it would avoid disorganization 
and protect society from the tyranny of some small 
group of workers. At this juncture, the argument of 
philosophical anarchists, like Thoreau and Tolstoi, 
gains force, since their objections go to the very nature 
of a state, which enforces the duty of a subject without 
questioning wdiether or not the individual desires his 
citizenship. In short, so long as progress is made by 
voluntary co-operation among laborers and consumers, 
so long as the individual has the choice of joining or 
ignoring the voluntary co-operative groups, there can 
be no objection to the valuable contributions that may 
be secured by the elimination of wasteful competition 
and the co-ordination of industry ; but the moment that 
such co-operative efforts are superimposed by a sover- 
eign state, that can and will enforce obedience and 
subordination, then such involuntary co-operation may 
be utilized as the instrument of tyranny — and for the 
tyranny of a Czar and a trust magnate we shall sub- 
stitute the despotism of the majority. This is the mes- 
sage of philosophic anarchism, and it is a message that 
must carry weight with Americans who are so jealous 
of individual liberty. 

2 — Proiit'. The Essential Element in Industry. 

A Socialist State, founded by a mastermind 
in social reform, would present the attractive 



98 THE SOCIAL COMMONWEALTH, 

features of an idealistic philosophy — in spite of the 
theoretical objection urged heretofore. We are told 
that Socialism is not merely an economic institution but 
a philosophy of life, in which the never ceasing chase 
for profits is eliminated, and the life of the individual is 
fostered in an environment of art, social service and 
high ideals. Social service and communal appreciation 
instead of an insatiable craving for profits will supply 
the motives for social activity. 

Briefly stated, therefore, a Socialist State pre- 
sents: (i) The possibility of the elimination of eco- 
nomic waste, by introducing economies inherent in 
monopoly. (2) The regulation of the labor supply so 
as to avoid unemployment, and secure for each worker 
the full reward of his toil. (3) The amelioration of 
the condition of the poor by securing for all a high 
standard of living and time and opportunity for health- 
ful recreation — made possible by the economies of mo- 
nopoly and the reduction of the incomes of the present 
idle rich. In short, Socialism would institute a system 
of co-operation in a monopolistic organization of indus- 
try that would serve as an introduction for the equali- 
zation of wealth. 

In a superficial view, we might be tempted to give 
the stamp of approval to the organization of a Social- 
ist State, controlling all the real estate and means of 
production within the state, and managed by the elect- 
ed representatives of the people — each citizen share- 
holder being entitled to one vote and one equal share in 
the profits of the Socialist State. However much we 
may disagree with the principles enunciated by indi- 
vidual Socialists, however much we may question the 
practicability of certain details, yet we must be fairly 
good Socialists if w r e give our assent to the organiza- 



SOCIALISM AND THE ECONOMIC SURPLUS 09 
tion of a Socialist State similar to the ore here outlined. 
For Socialism is neither more nor less than the demo- 
cratization of industry as a necessary supplement to 
political democracy. If we approve a proposition in 
which every citizen, desiring the privilege, may have 
an equal voice in the management and an equal share in 
the profits of all economic activity of the state, we have 
the essence of Socialism, and we can easily relegate all 
questions of detail to the future. In short, if we dis- 
approve of Socialism,; or if, accepting some of its prin- 
ciples, we yet reject the program; or if we seek for a 
modified Socialism (that shall meet the objections rais- 
ed by Thoreau and Tolstoi), we must successfully at- 
tack the concept of a Socialist State — like that founded 
by some Napoleon of social reform — organized to man- 
age and control practically all the industries of the 
state for the equal interest of all its citizens. Let us 
examine a few practical difficulties that such a Social- 
ist State must encounter. 

Of all the indictments brought against the competi- 
tive system, none has been emphasized so much as the 
craving for profit, which is at the basis of our present 
day economic activity. Socialists and social reformers 
have vied with each other in condemning the unscrup- 
ulous greed of the "bourgeoisie." Yet, admitting the 
seamy side of the chase for profits, should we blind 
ourselves to the benefits and advantages? The Social- 
ist argument against an industrial system organized for 
profit consists, usually, of a series of rhetorical ques- 
tions. Would Shakespeare have done more effective 
work if he were paid the munificent dividends of our 
modern successful playwrights and theatrical manag- 
ers? Was Milton paid more than a few paltry pounds 
for the glorious "Paradise Lost"? How much did 



100 THE SOCIAL COMMONWEALTH. 

Michael Angelo receive for his inestimable work? 
From "unanswerable" arguments like these our Social- 
ist friends conclude that industry can be organized and 
successfully carried on without the system of profit as 
its basis, since the highest work of man did not demand 
a money stimulus. 

Nothing, bearing the stamp of apparent truth, could 
be more fallacious. One illustration ought to suffice to 
demonstrate the unwarranted deduction dtfawii by So- 
cialist agitators. A is a boy, young, intelligent and 
ambitious, who is very fond of debate and literary 
work. He is the Secretary of a debating society, and 
regards every assignment for literary work as a distinct 
reward. And yet, in spite of his ambition and his sense 
of duty, he avoids, as much as possible, the drudgery 
of secretarial work — the mailing of notices, collection 
of dues and similar tasks. In the first case, the work 
is more difficult, takes more time and taxes all his 
mental strength while in the second case the labor is 
simple and can be performed in a few minutes of rou- 
tine work. But the first satisfies a deep craving of his 
nature, while the second implies a drudgery for which 
he feels himself unfitted. The great works in life — the 
tasks that receive the honorable respect of mankind, 
"the paths of glory" even though they "lead but to the 
grave" — do not demand the impetus of profit. From 
Moses to Napoleon and Lincoln the great figures of 
history have done the world's work without thought 
of economic rewards. 

It is the undesirable labor, the routine work that 
we dislike so much, that demands material compensa- 
tion. Were you to place a genius like Napoleon Bona- 
parte in a factory (even though you assured him a rel- 
atively high standard of living) , he would probably re- 



SOCIALISM AND THE ECONOMIC SURPLUS 101 
fuse to work merely for the honor and glory of his fcl- 
lowmen. He would demand economic returns and a 
saving fund which would, in a few years, free I 
from the necessity of factory life. He would say: let 
me work along lines that appeal to me and perform 
tasks of large significance, giving play to the thoughts 
of my mind and the promptings of my heart, and I will 
joyfully labor without the necessity of economic re- 
ward. But if you want me to assume duties that will 
restrict my intellectual development and cramp my 
energy, then you will have to force me to work because 
of my economic needs, because of the bread and cloth- 
ing that nature demands. Furthermore, I wall desire 
an economic return commensurate with my services, so 
that I may have the hope of being released from un- 
desirable labor in the future (by saving an economic 
surplus that will make me independent of factory life). 
In short, the system of profit presents a motive not 
so ideal as that of social service, but it is an indispensa- 
ble recourse when there is work to be done which is 
unpleasant and unattractive. The question in every So- 
cialist State will be : who will prepare the table for the 
banquet of the comrades? Can we obtain a sufficient 
number of such volunteers as compared with those who 
generously offer their services as after-dinner speakers ? 
We need not worry about politicians, orators and 
writers (both good and bad) under a Socialist regime, 
but what must give us concern is the necessity of pro- 
viding for a sufficient number of farmers, cooks and 
tailors. Service that gives large play to the imagina- 
tion and offers opportunities for mental development 
and service that compels the respect and admiration of 
our fellowmen may be independent of economic com- 
pensation. A different age may value the services of 



102 THE SOCIAL COMMONWEALTH, 

a cook and a tailor as equivalent to that of a professor 
and a musician. But even under such improbable con- 
ditions, the average cook or tailor would prefer to do 
other work or no work, while the professor or musician 
would glory in activities that present manifold oppor- 
tunities for the satisfaction of the higher cravings of 
life — opportunities that must be denied in many other 
callings because of the very nature of the work. For 
example, to-day, you could hardly induce a Professor in 
a University, receiving a salary of five thousand 
($5,000) Dollars, to exchange his position for that of 
a buyer in a department store with a salary twice as 
large. We may, therefore, conclude with this general 
principle :so long as there is unpleasant work to be done, 
we must have some system of profit to enable the work- 
er to hold the expectation of achieving freedom from 
such unpleasant work in the days to come — unless, 
indeed, we were to adopt a system of coercion analogous 
to the military service of continental Europe. 

3 — Profit: Indispensable for an Economic Surplus. 

But there is a much stronger argument for retaining 
certain features of the profit system. Some method of 
economic reward is necessary so long as there is an 
ample supply of unattractive work to be done ; and some 
such provision becomes indispensable in order to secure 
an economic surplus in the community. We have no 
assurance that the economic surplus, indispensable to a 
high civilization, would be maintained in an industrial 
society organized on a social democratic basis. In such 
a state it would be to the interest of each individual to 
appropriate the fruits of present day activity, while 
there would be no corresponding selfish motive for 
insuring a replacement fund for capital. For example, 



SOCIALISM AND THE ECONOMIC SURPLUS 103 
assuming that the Socialist State shows a net profit 
(whether in products or in money) of $10,000,000 
each year, we believe that the citizens would be inclined 
to divide up the profits equally each year, rather than to 
abstain from profits for the sake of future increased re- 
turns (by continuing- the surplus in the business of the 
state). Thus, with a membership of one hundred 
thousand citizens, each lumber would probably pre- 
fer to receive the $100 to which he would be 
entitled, as an equal shareholder, rather than to con- 
sole himself with the hope of problematical increased 
returns in the future. Each individual citizen will feel 
that his future as a shareholder and an employee of 
the Socialist State is assured, and the necessity for pro- 
viding for the future will not seem imperative. The 
motive for saving, therefore, will diminish, and the 
added income derived from being a shareholder in a 
Socialist corporation will mean an opportunity for a 
higher standard of living rather than the accumulation 
of savings by the poorer classes. In the tropics, where 
nature supplies the necessities of life with a lavish hand, 
we find that man does not bend all his energies for the 
accumulation of surplus goods, because he knows that 
in the future, as in the past, the luxuriant plant life that 
surrounds him will secure him from starvation and 
suffering. A Socialist State that will assure all 
citizens of work and comfort may become a hot-house 
for the culture of men and women who will take little 
interest in the important work of providing for future 
generations. Even assuming that the Socialist cor- 
poration will not adopt the principle of equal pay for 
all workers, but will grade salaries in accordance with 
the value of the services rendered by its employees, the 
latter will have no strong tendency to save, since the 



104 THE SOCIAL COMMONWEALTH. 

Socialist State will be regarded as the "all-providing 

father/ 1 

With all its shortcomings, our competitive system, 
because of the large fortunes which it makes possible, 
insures (after deducting the amount necessary for a 
high standard of living) the maintenance of a large 
surplus in the hands of people who can have no further 
use for their capital besides reinvestment. But in the 
democratization of industry, with the incidental elimin- 
ation of large fortunes, there will be practically no 
surplus of individual property. The relatively small 
equal dividends, received by each citizen from the busi- 
ness of the Socialist corporation, will be expended, for 
the greater part, in the pursuit of a higher standard of 
living — since the fear of want will be removed by the 
knowledge that the citizen is a member of a Socialist 
State that will supply w r ork and the material necessities 
of life. There will be no strong motive for the accumu- 
lation of fortunes for the benefit of heirs, since every 
father will feel that his children will find proper places 
in the Socialist State. An economic surplus for the re- 
placement of capital and the increase in the total of 
investments depends, almost exclusively, on two fac- 
tors : — (i) The accumulation of savings by the rela- 
tively poorer classes. (2) The investments by the 
wealthy classes, after the satisfaction of a relatively 
high standard of living. 

Neither of these two motives can operate effectively 
in the Socialist State, since the necessity for sav- 
ing on the part of the poor will be greatly de- 
creased, and there will be none so rich (not even the 
more important salaried officials) that would be able to 
accumulate a substantial surplus after satisfying the 



SOCIALISM AND THE ECONOMIC SURPLUS (OS 
diverse wants of s^ enlightened world and the higher 

standard of living- that Socialism would promote. 

In fact, the preservation and increase of the economic 
surplus is the great problem that confronts every So- 
cialist scheme. We cannot depend upon the accumu- 
lations of individuals since the very institution of eco- 
nomic equality makes impossible large savings by indi- 
viduals. On the other hand, an industrial system, or- 
ganized for profit compels economy and fosters a spirit 
of thrift that is essential to the accumulation of an 
economic surplus. 

Hitherto, w r e have considered only the possibility of 
the accumulation of an economic surplus from the 
savings of individual citizens of the Socialist State. But 
is it possible for the state as a corporation to accumu- 
late an economic surplus that will be part of the public 
property? This would be possible only if we could find 
adequate means for securing economical manage- 
ment of the Socialist corporation, so that the economic 
surplus might be increased instead of wasted. In our 
modern competitive system, coincident with the enor- 
mous waste of life and property, we have the evolution 
of highly effective Aethods for securing profits in any 
particular business, due to the keen industrial struggle 
which compels the utilization of the most effective 
management in that industry. Unfortunately, the strug- 
gle for profit in any particular business often has wider 
effects of a detrimental nature — our oil kings may 
pile np huge profits in their industry at the expense of 

me ^mailer and less organized business. The crucial 
question is : can we obtain in a Socialist State methods, 
equally effective, which will, at the same time, be free 
from the wastes of competitive industry? T do not see 
how this can be achieved except through the recogni- 



106 THE SOCIAL COMMONWEALTH. 

Hon of profit as the end and aim of the managers of the 
business. Unless profit be made the central feature 
there cannot be a strong motive for profitable manage- 
ment in an}' industry. There are many activities in 
which profitable management is only of secondary im- 
portance — as in handling the police force of a city. In 
such cases, we may have splendid management without 
reliance on the factor of profit. But where we con- 
sciously seek for an economic surplus (where profit is 
uppermost), we must stimulate the energy of the man- 
agers by offering opportunities for sharing the profits 
due to economical management. 

In short, the Socialist corporation would feel obliged 
to pay a portion of the profits to the active man- 
agers of the state's business — a practice that must be 
distasteful to Socialist thinkers. Furthermore, the 
citizen shareholders, by majority vote, would probably 
select the managers — to suppose anything else would 
be to eliminate the democratic feature of Social Dem- 
ocracy. Accordingly, we might have a repetition of 
political struggles for offices. And if, as may well be 
the case, such offices should prove lucrative, the whole 
machinery of political corruption and boss rule would 
be transferred to the more profitable field of the So- 
cialist corporation. 

In other words, if the managers of our Socialist cor- 
poration are to receive merely moderate wages — in true 
Socialist fashion — we may have a relatively honest 
administration, but without any guarantee for profitable 
management. On the other hand, we may achieve true 
economic success by offering liberal rewards to the 
chief officers of the Socialist corporation in proportion 
to the dividends declared, but this would undoubtedly 
result in "machine rule" based upon corruption even 



SOCIALISM AND THE ECONOMIC SURPLUS 107 
worse than the political boss rule of to-day — because 
larger money interests would be at stake. 

If the choice lies between efficient dishonesty and 
honest inefficiency, the troubles of a Socialist state are 
visible yet deep seated and fundamental, while the evils 
of unprofitable management, for the community, are 
not eradicated.* 

4 — The Inertia of Monopoly. 

A Socialist state presents a danger greater than any 
question of profit. The great evils inherent in mon- 
opoly present themselves. It is true that a Socialist 
monopoly, controlled by the equal votes of citizen- 
shareholders, must differ radically from the grinding 
private monopolies of our present economic system. 
There will not be such a strong motive for extracting 
the utmost from the consumer, and taxing the product 
with the highest possible price. But it must still retain 
the inertia of monopoly — the opposition to change, and 
the acquiescence in existing forms of industry. Thus, 
it is generally known that trusts sometimes suppress 
valuable patents even at enormous cost to the business, 
in order to avoid the necessity of making the business 
conform to the expensive improvements that such pat- 
ents would require. Charges have been made that 
a certain telephone company (which is a monopoly over 
large and important districts) has bought up valuable 
patents, which it refuses to utilize for the benefit of the 
public, because it would mean a re-organization of a 
large portion of its business. In the non-monopolistic 
industries of our day, however, competition constantly 
forces the elimination of old methods and outworn 

* For a discussion of the value and importance of an 
Economic Surplus, see Chapter VII, section 3, and the com- 
prehensive work of Professor Simon Patten. 



T I : E S< >C i A l i I :o:vi MONWEALTH. 
machinery. Like the evolutionary process, it eliminates 
from industry the costly ways of doing things, and 

lstantihjr aids in the survival of machinery and meth- 
ods that are found most fit in the industrial struggle. 

The effects of competition reach even farther than to 
mere methods of production, for the struggle for sur- 
vival of the fittest is most pronounced in the field of 
consumption. Our present economic system has been 
severely criticized because of the constant economic 
waste that it entails, particularly in the useless adver- 
tisements that extol the virtues of various brands of 
tobacco, whiskey and breakfast foods. While such 
criticism contains a large element of truth— as evi- 
denced by the fact that the great economies held forth 
in the organization of a trust are the elimination of 
useless advertisements and competing sales-agents — we 
must ever remember the other side of the problem. The 
whole science of economics depends on the postulate 
that the increase of wants and the greater satisfaction 
of human needs are most desirable conditions and form 
the index for advancing civilization. Now, our travel- 
ing salesmen, the advertising columns of our news- 
papers and magazines and even the unsightly bill pos- 
ters are of enormous economic value in stimulating 
wants and evolving* new human needs. 

We may, of course, adopt the philosophy of Thoreau, 
and conclude that man should have but few material 
needs, and even those such that may be easily satisfied 
in primitive fashion. But so> long as w r e accept the 
fundamental principle of economics, that civilization 
and enlightenment imply the increase of desires and the 
expansion of human zvants, we must concede that ad- 
vertisements have a true value in life. Now, in an 
industry that is controlled by a monopoly it is usually 



SOCIALISM AND THE ECONOMIC SURPLUS 109 
profitable to eliminate a great deal of advertisements of 
particular brands, because, if the monopoly has control 
of the entire industry, the profits will still reach the 
same pockets whether the public purchase the poorer or 
better quality of goods that are placed on the market. 
For example, in the organization of the Whiskey Trust, 
it was found profitable to dispense with the advertise- 
ments for a number of brands, since, relying on the 
whiskey habit already existing, the promoters felt that 
they would not diminish the demand by neglecting to 
push one brand in competition with others which they 
controlled. 

It is true that large corporations usually advertise 
several brands. The National Biscuit Company, for 
example, expends large sums of money in bringing to 
the attention of the public not only "Uneeda Biscuits" 
but also "Graham Crackers" and other brands, but this 
is done only to extend the general demand by putting 
forth new goods or preserving the old demand which 
might otherwise tend to decrease. In few cases, prob- 
ably, is it applied for the purpose of inducing the pub- 
lic to prefer the better brand at the same price, since the 
profits may be larger from the poorer grades. In short, 
a monopolistic organization of an industry, whether 
public or private, furnishes no sufficient incentive for 
change and economic improvement, nor for increase in 
the diversity of the products for consumption, while our 
present day competitive system — and I am not here 
endeavoring to defend its many evils — does provide for 
such change and improvement, however ruthless and 
wasteful its methods may be. 

5 — A Social Cormnonzuealth and Industrial Democracy. 

As the prime objection to the competitive system of 



110 THE SOCIAL COMMONWEALTH. 

industry, however regulated by law and modified by 
moral rules, centres around the problem of poverty and 
unemployment, so the insuperable difficulty with a 
Socialist organization of industry is the lack of any 
guarantee for the maintenance and increase of the eco- 
nomic surplus and the dangers inherent in the inertia 
of monopoly. The vices of competition dispose us to 
look with favor upon the concept of a Socialist organ- 
ization of industry, while the defects of Socialism can 
be eliminated only by the introduction of some system 
of profit, which is bound up with the modern competi- 
tive system of industry. It would seem, therefore, that 
we are between the devil of competition and the deep 
sea of Socialism, unless, indeed, we can evolve some 
method of organization that will retain the virtues of 
each without the disadvantages that they entail at the 
present time. Such an ideal can be realized just as soon 
as we recognize one fundamental principle in every 
attempt to reform society and reorganize industry. We 
can evolve a Social Commonwealth that will represent 
the highest form of co-operation in industry; we can 
create a Socialist corporation which will not share the 
wrongs inherent in monopoly. But this corporation 
will exist not to the exclusion of, but in competition 
with, individual initiative. 

This principle is the keynote of a Social Common- 
wealth. It differs front Socialism because the latter 
would monopolize all industry and level all ranks. It 
combats the Socialist ideal of a coercive institution, 
forcing an unwilling member of society to become a 
subject of a Socialist State. On the other hand, a true 
Commonwealth must abhor the state of "free competi- 
tion/' with the consequent slavery of the unemployed 
and underpaid. A Social C ommomvealth zvould in- 



SOCIALISM WD THE ECONOMIC SURPLUS 111 
dorse the Socialist argument for co-operation and regu- 
lation in the economic world, while it would recognize 

benefits of competition due to the incentive of profit 
and the rewards of finance. 

A Social Commonwealth may be defined as a vol- 
untary social democracy — a co-operative organization 
of industry in competition with individuals who do not 
participate in its activities. From one point of view, 
therefore, the Social Commonwealth represents a 
thorough regulation of the present economic system by 
the introduction of the element of voluntary co-opera- 
tion on a large scale in competition with individualism. 
A Social Commonwealth may be pictured, likewise, as 
a modified Socialist State, a Commonwealth that will 
extract the good from Socialism and cast off its evils— 
the lack of an economic surplus and the inertia of 
monopoly — together with the waste and the barbarism 
of our competitive system. 



CHAPTER IX 

The Single Tax and the Population Value of 

Land. 

i — The Single Tax. 

There is one reform program that proposes to estab- 
lish true individual liberty for all time by the use of 
the taxation power of the state and nation. The Single 
Tax would have us utilize the taxation power for the 
purpose of appropriating, for the benefit of the public, 
the full rental value of all land. The followers of 
Henry George do not attempt to introduce a compli- 
cated system of politics or economics to cure the ills of 
present day industrialism. Nor do they aim to extend 
the powers of the government beyond the well-estab- 
lished limits of the present time. They simply advocate 
the utilization of the taxation power of the state, which 
is unlimited, for the purpose of securing a more equit- 
able distribution of wealth and the abolition of poverty. 

This is not the place for a presentation of the theory 
of the Single Tax and a discussion of its benefits. Yet 
the theory is so plain and simple that a few pages would 
suffice for a discussion of its advantages and a. consid- 
eration of the difficulties that must be encountered be- 
fore ultimate success. One principle can be appre- 
ciated by all : if the cities of New York, Chicago, Bos- 
ton and San Francisco were to-day the absolute owners 
of all the land within their limits, the people of these 
municipalities would be receiving benefits that are 
almost inconceivable to us to-day. 

The New York Tax Appraisers estimated the value 
of all the real estate in the City of New York in 19 12 



114 THE SOCIAL COMMONWEALTH. 

(exclusive of corporate franchises and privileges) as 
$7,297,579,651. The value of the land, exclusive of 
all improvements, is $4,563,357,514, or nearly twice as 
much as the value of all the improvements and build- 
ings placed upon the soil of New York City. The 
rocky island of Manhattan is the most valuable portion 
of this land, being assessed, in 191 2, in the sum of 
$3,127,852,473, exclusive of all improvements. Three 
hundred years ago this island was purchased from the 
Indians for trinkets worth twenty-four dollars. Can 
you imagine the benefits that would have followed if 
the Dutch settlers had firrruly resolved to hold all the 
land of New Amsterdam as public property — as an 
inalienable estate, no part of which would be sold, but 
all lands would be apportioned among* individual cit- 
izens, who would be charged the full rental value of 
their respective holdings? 

Instead of many petty landlords, grown rich by the 
growth of the metropolis of the New World, we would 
then have only one landlord — the City of New York. 
This city, by retaining the ownership over the barren 
island of Manhattan, would be richer to-day by over 
$3,127,000,000, without any extra effort on its part. 
Estimating the rental value of the land as 6% per year. 
New York City would be receiving an added annual 
income of nearly $188,000,000. 

There were about five million people resident in New 
York City in 191 2, so that the income derived from 
being the landlord of Manhattan Island would enable 
the municipality to- expend on each inhabitant — man, 
woman and child — nearly $38 annually. If we estimate 
five persons to- a family, the City of New York might 
have been able to offer an annual gift of $188 to* each 
of its one million families. In other words, it would be 



THE SINGLE TAX. US 

able to dispose of its rent, obtained from its "landlord 
interests" in Manhattan, by giving to every family in 
the entire City of New York (including Brooklyn, 
Bronx, Queens and Staten Island) more than three and 
one-half dollars per week. This would be sufficient to 
make involuntary starvation an impossibility. If we 
add the income that might have been derived from 
reserving in the municipality the title to the lands of 
Brooklyn and the other boroughs of New York, we 
could to-day proudly refuse all the philanthropic offer- 
ings of the great and the belated sacrifices of captains 
of industry for the benefit of the common people. 

We would go a long way in the abolition of poverty 
and the creation of golden opportunities (by increasing 
educational facilities, offering free medical aid, etc.) 
for the development of a "free city." 

This is a story of "what might have been" not only 
in New York but in every American city. There is a 
method, however, which would enable us to secure all 
these benefits in spite of the lack of foresight of our 
forefathers and the sins of ancient land grabbers. The 
Single Tax program means, virtually, the appropriation 
of all real estate, exclusive of improvements, for the use 
of the public, so that to all intents and purposes the 
state would be the owner of all land, since it would tax 
out of it all the rental value. 

The result of the institution of the Single Tax seems 
highly desirable. It is just, proper and expedient that 
the public, who by their presence and labor create and 
increase land values, should be the beneficiaries. The 
present system is a piece of stupidity, for it permits the 
landlord to profit from the necessities of the very public 
that make his land valuable. We can have no quarrel, 
therefore, with those earnest workers who seek to 



116 THE SOCIAL COMMONWEALTH, 

remedy the mistakes of former ages by securing for the 
benefit of the public the land values created by the peo- 
ple themselves. Only when the followers of Henry 
George attempt to utilize the taxation power of the 
State for the purpose of confiscating property, we have 
the right to object to the method employed for the 
realization of their ideal. 

Single Taxers do- not propose to have the public take 
title to all the real estate (exclusive of improvements). 
But they do propose to achieve a similar result by util- 
izing the taxation power of the state for the purpose of 
confiscating property values. Joseph Fels, probably the 
most influential leader of the Single Tax, has a large 
soap business in Philadelphia worth several millions of 
dollars. Let us assume that to-day he disposes of all 
his holdings in the soap business, and, after the sale, 
invests all the proceeds in vacant lots of his home city. 
Immediately thereafter, the legislature of the State of 
Pennsylvania enacts a law taxing land to its full rental 
value. As a result, the title deeds of Mr. Fels become 
valueless and he has only the satisfaction of having 
advanced the cause. To anyone but Mr. Fels the loss 
of a whole lifetime of effort might prove too high a 
price for the triumph of the theories of Henry George. 
Flirt herrnore, the loss would have fallen on the pre- 
vious holder, if Joseph Fels, instead of buying vacant 
lots, had purchased a newspaper or a department store. 
Now, to the ordinary business man and to the hard- 
headed voter such taxation implies confiscation, and no 
amount of specious argument will prove the contrary. 
It may be a necessary confiscation — even as the emanci- 
pation of the negroes in the Civil War — but it does 
involve the taking of property from those who have 



THE SINGLE TAX. 117 

present day values and utilizing such property values 
for the advantage of the entire public. 

Henry George, starting from the premise that land 
belongs to God alone, deduces the startling con- 
clusion that since land cannot, in its nature, belong to 
individuals, therefore, anyone who appropriates it is 
virtually a thief, and should not receive any reward 
when he is forced to return the land to its rightful 
owner — the community. Furthermore, since the re- 
ccwcr of stolen goods can have no claim of title, even 
so, argues the father of modern Single Tax, we are 
justified in appropriating the land of those who derive 
their title from ancient wrong-doing, though the 
present ow T ners may have paid valuable consideration 
for their land. But when the law is invoked for the 
sake of supporting a contention, logic demands thai 
the whole law be examined. There is a well established 
principle of commercial law that an innocent purchaser 
for value of a property-right cannot be made to suffer 
for the misdeeds of the previous holder (as the bona 
fide holder of a check or promissory note) . And if the 
objection is raised that this rule applies only to nego- 
tiable paper, we may point to the old common law rule 
that applies to squatters and settlers. If any man with- 
out any show of right remains in open and undisturbed 
possession of an estate for a certain time (usually 
twenty years), his title to the land becomes secure. 
Most of our present day landlords and their predeces- 
sors have maintained their title unmolested for many 
scores of years. The wrong doing of previous holders 
could not, from the legal point of view, affect the 
present title. 

"Property" is purely a legal term, and the Sov- 
ereign power may, from time to time, designate 



118 THE SOCIAL COMMONWEALTH. 

what is, and what is not, property. We may, 
for instance, decree that intoxicating liquors and 
lottery tickets are not property, and anyone could then 
appropriate these articles with impunity, since the 
charge of larceny could not be sustained against them 
for taking something in which the law does not recog- 
nize any property right. On the other hand, we may 
give away the "air rights" to syndicates who would 
then charge us for airship navigation — even as land- 
lords now charge for breathing space. (Such a con- 
dition might become of great practical value if fran- 
chises be granted for exclusive rights in airship navi- 
gation, for the holders would be able to reap benefits 
comparable to the profits of present-day owners of 
street railways.) The justice and propriety of such a 
procedure is another question. 

The obvious fallacy in the reasqning of Single Tax- 
ers is that the term "property" is given an ethical in- 
stead of legal interpretation. From: the legal point of 
view "property" is such only when sanctioned by the 
State and protected by its Laws. 

There are certain errors in the Single Tax program 
which its friends cannot afford to ignore, and even a 
cursory examination may yield profit for modification 
and amplification of the interesting theories of Henry 
George. 

A. Single Taxers usually assume that private own- 
ership of land is the only special privilege that grows 
in value with the increase of population and wealth. 
Undoubtedly, private ownership of land is the most 
important class monopoly, yet it is not the only soeial 
value which depends on the growth of population and 
industry. Antique jewelry, paintings, rare autographs 
and a thousand and one other monopolies grow tre- 



THE SINGLE TAX. 119 

mendously in value with the increase of population and 
wealth. Of course, land is of far more importance than 
the toys and trinkets of the rich, but all partake of the 
same unique characteristic — monopoly, which means 
that there is only one such piece of land, or one such 
painting in all the world. Land, then, increases or 
decreases in value in accordance with the ordinary rules 
of economics : the value of am article which cannot be 
reproduced (like laud) depends altogether on the de- 
mand, since the supply is fixed and unchangeable. The 
demand, of course, is largely affected by the factors of 
population and wealth, i. e. how many people want a 
particular thing, and how much means have they for 
the satisfaction of their wants. It may be wise and 
expedient that articles like land (the supply of which 
is limited) should be owned, controlled or utilized by 
the general public, who, by their presence and labor, fix 
land values; but private ownership of land is robbery 
only if we assume that owners of rare paintings and 
heirlooms are "robber barons." Newspapers often 
increase in value with the growth of a community out 
of all proportion to the value of the services of the 
individual editors and business managers. In so much 
as the increased value is not due to labor, capital and 
skill, wherein does it differ from the "unearned increm- 
ent"of land? 

B. The followers of Henry George insist that a 
Single Tax on land will defray all the necessary ex- 
penses of government, and that no other taxes should 
be levied. The Single Taxers would employ taxation 
solely to eliminate what they consider the worst vice — 
private ownership of land. But even the strongest free- 
traders would be unwilling to indorse such a view, 
because the public might derive great profit from the 



120 THE SOCIAL COMMONWEALTH, 

taxation of luxuries without hindrance to ordinary 
commercial enterprises. We might profitabfy utilize 
the taxation power of the state for the elimination of 
other evils and the introduction of further reforms. In 
any event, we should not bind ourselves beforehand to 
restrict taxation solely to land. In other words, even if 
we should accept the principle of full taxation of land 
values, we cannot afford to hail it as the Single Tax. 

C. Those who advocate a Single Tax correctly 
analyze one great evil — the landlord evil — but like so 
many other enthusiastic adherents of a "cause," they 
are blind to other necessary reforms. They neglect, for 
example, to consider the problem that is the outgrowth 
of the vast influence of money and credit in our indus- 
trial system. The power vested in a "money trust," in 
a combination of banking houses (whether direct or 
indirect) for the purpose of controlling loanable capital, 
is a serious monopoly second only to the monopoly of 
land. By the control of cash in times of industrial 
depression, our captains of industr) r may reap harvests 
of profit from the privations of the large mass of our 
countrymen. By their powder over credit in the times 
of prosperity, they often prove themselves the indus- 
trial despots of the country. 

Some Single Taxers challenge these facts with the 
assertion that all monopolies depend on the land mon- 
opoly, and that all iniquitous trusts would disappear 
with the triumph of their peculiar reform. But there 
are a number of trusts (and these among the most 
wicked) that operate practically as buying and selling: 
agencies. The Tobacco Trust, for example, does rot 
hold title to vast areas of land for the cultivation of 
tobacco. On the contrary, by its control over the 
markets for the sale of its products it forces the farmer 



THE SINGLE TAX. 121 

to sell at prices practically fixed by the trust. The 
farmer toils for the tobacco trust, and pays his taxes to 
it, as faithfully as any employee of the company and its 
allied firms. Indeed, the necessity which drives the 
farmer to pay interest on iiis mortgage, and to earn a 
livelihood for his family forces him to render unto the 
trust larger services than could he obtained through a 
careful system of lord and vassal in a feudal world. 
And so, it has been aptly explained that "it is better and 
more profitable to have an industry by the throat than 
to have an industry. " And those who are in control 
of the sources of our great loanable capital (banks, 
insurance companies, public utilities, etc.) have grasped 
this important principle long ago.* 



* My attention has been called to the condition of a large 
number of farmers in Eastern New York along the Hudson 
-River, who have become, to all intents and purposes, clerks 
of allied milk Companies that constitute a particularly vicious 
combination. This Milk Trust, while raising the price of 
milk to the city consumers, has systematically depressed the 
prices paid to the farmers. By its control over the market 
and transportation facilities, the Trust has succeeded in mak- 
ing paid slaves of thousands of farmers. As the soil of this 
district is very poor and fit only for dairying purposes, the 
farmers become so dependent on the stipends from the Milk 
Trust that they have neither the time nor the initiative to 
strike out into new fields. A friend remarked to me that in 
everything but outward appearance they were just as much 

the clerks of the Trust as the bookkeepers who keep the 
records in the city. The farmer becomes merely a piece 
worker subject to the demands of the ''milk boss," and re- 
ceives his pay in accordance with the number of quarts that 
he brings daily to the warehouse. And just as in the open 
shop the employee is often driven faster and faster for the 
same pay, even so the companies demand more quarts of 
milk for the same price. The only difference is that the 
farmer has not yet learned the lesson of the strike and the 
value of co-operation. 



122 THE SOCIAL COMMONWEALTH. 

2 — Population Value of Land. 

Hitherto, in the discussion, we have considered 
wherein Single Tax fails to meet the larger issues of 
present day industrialism, but there has been no denial 
of the value of Single Tax as an important reform. In 
order to prove acceptable, however, Single Tax must 
be considerably modified. We are now ready to con- 
sider what that modification should be. 

Land is of use and value to mankind for any one of 
three reasons. ( i ) As agricultural land, it is valuable 
for supplying man with the necessities of life. In agri- 
culture (and kindred industries like grazing, poultry 
raising and lumbering) man utilizes the surface of the 
soil, and his labor consists in scratching the surface in 
order to obtain useful plant life. He does not dig 
down deep into the bowels of the earth (as in mining), 
nor does he erect huge skyscrapers for which land is 
valuable only as a foundation. Farming*, therefore, is 
based on the surface value of the land. (2) Mining 
lands are useful for the purpose of providing man with 
metals and fuel — with gold, silver, copper, iron, pe- 
troleum and coal. We may include in this subdi- 
vision the water-power that is becoming so important 
in our industrial life. The surface value of land is of 
no value to the miner. He is interested, primarily, in 
the sub-surface value of the land, in the age-long de- 
posits of valuable natural resources. This sub-surface 
value differs in many respects from the surface value 
of land. The former is more speculative and the profits 
derived therefrom are less stable. Furthermore, be- 
cause the districts containing mineral deposits (and 
water power) are small in area when compared with 
the large extent of agricultural land, such districts are 



THE SINGLE TAX. 123 

exceedingly valuable to the whole community, and in 
proportion as they are indispensable to the public wel- 
fare so must the opportunities for monopolization by 
private individuals be carefully guarded. (3) There is 
a third use for land which we may designate as its 
"population value" — or the value placed upon the land 
because of the concentration of a large number of 
people on a restricted area in the neighborhood of such 
land. In every city, the land is used neither for agricul- 
ture nor for mining, but primarily, as a material sup- 
port — as the foundation for dwelling houses, stores, 
factories, tenements and office buildings. The value of 
such land depends neither on its natural fertility nor on 
the sub-soil deposits of natural resources, but only on 
the number of people in the vicinity and, the extent of 
the industries for which it forms a support. Its value 
depends almost entirely on the position it occupies with 
reference to a large aggregation of human beings. This 
is a use quite different from the tw r o foregoing, and the 
population value depends on conditions altogether un- 
like the surface and sub-surface value of land.* 

Xow, it is perfectly clear that the population value of 
land, depending, as it does, on the growth of population 

* This classification represents certain well-defined divis- 
ions, but the three grades pass into one another almost im- 
perceptibly and we cannot mark off by a rigid line all three 
classes. Truck farming is carried on even within the limits of 
the City of New York and some of the most productive gas 
wells are found in the fruitful agricultural district of western 
Pennsylvania. As a rule, however, land can readily be clas- 
sified according to (1) its agricultural value; (2) its mineral 
and water power value; (3) its population value. (A farm 
or a mine becomes more valuable by the building of a rail- 
way line in the vicinity — the situation is improved and the 
products can be marketed with less expense. This added 
value bears some analogy to the population value, except 
that the main feature is not the concentration of population, 
but the accessibility of products to markets.) 



124 THE SOCIAL COMMONWEALTH, 

and wealth, should bring corresponding benefits to the 
public, and a Single Tax, which would retain for the 
public the value created by the people themselves, is 
just and equitable. We may also agree that mineral 
lands (and water-power), because of their immense 
value and limited quantity, should be owned by the 
public. They should never have been permitted to pass 
into the hands of individuals. To-day, with the 
strong sentiment for the conservation of natural re- 
sources, we may be sure that the people will not tolerate 
any further squandering of the sub-surface wealth of 
the land of the nation. 

Prominent Economists and Sociologists are repeat- 
edly emphasizing the enormous importance of our 
mineral wealth. We can reproduce our agricultural 
wealth as we renew our crops from time to time; ma- 
chinery offers opportunities for immense expansion in 
the field of production, but all machinery, and, indeed, 
our whole industrial system rests, ultimately, on the 
amount and quality of our metals and fuel. Without 
copper wires for the conveyance of electricity, iron for 
the production of steel, lead for our pipes and coal and 
oil for our furnaces, our economic system would be 
badly crippled. Leading men of science have traced 
civilization from the point of view of the utilization of 
mineral resources, and have shown how the metal age 
succeeded the stone age, and how the opening of the 
iron and coal deposits of England transferred industrial 
supremacy from the Italian and German cities to the 
British Isles. In our own country, some of the most 
important industries would have been impossible but 
for the extensive coal fields of Pennsylvania, the iron 
fields of the Lake Superior region, etc. It has been 
stated that the limitation of our supply of mineral re- 



THE SINGLE TAX. 125 

sources offers the real check upon the growth of popu- 

ion which Malthus endeavored to find in the limi- 
tation of our food supply. Without a large quantity of 
min sources, we cannot obtain the reasonable 

comforts of life and a large supply of food, since in 
every walk of life, from manufacture to agriculture, we 
must employ machinery and other products of the 
mires. Under such circumstances, it does not require 
the eye of a prophet to see that the time must come 

en our states will take over (probably by condemna- 
tion proceedings under the rights of eminent domain) 
the natural resources, including water power, within 
their borders. 

As regards our agricultural lands, there seems to be- 
no such popular or scientific demand for state owner- 
ship or for a system of taxation which will appropriate 
the full rental value of such land. The farmer is uni- 
versally recognized as an invaluable element in our 
national life. The old glory of England rested upon a 
free and independent yeomanry, and the virile fanners 
of the West are to-day the most progressive and val- 
uable portion of our citizen-body. Any measure that 
might tend to injure them would be unwise and pro- 
ductive of harm. The farmer has a peculiar feeling of 
kinship for the old homestead, the trees that were 
familiar to him in the days gone by and the ground 
which he has known for many years (so utterly unlike 
the ever-changing city). We cannot afford to diminish 
this interest or undermine the economic position of the 
farmer. Single Taxers contend that their tax on land 
would involve the abolition of all other taxes, so that, 
in the long run, the farmer would probably pay less 
than he does to day (with the tax on land, improve- 
ments, revenue taxes and protective tariff). Assuming 



126 THE SOCIAL COMMONWEALTH, 

that this may prove to be the case, we may answer that 
the farmer is taxed too heavily at the present time, and 
our efforts should be to decrease taxation in his inter- 
est. Indeed, we might make out a strong case for ex- 
empting purely agricultural land from all but local 
taxation, which may prove of far more value to "the 
other half" than the exemption from taxation of 
churches and charitable institutions. 

But we are not here concerned with the formulation 
of a new system of taxation for farmers. We are 
simply considering a defect in the Single Tax program 
in so 1 far as it would impose a heavy tax on a most valu- 
able portion of our population. Since Single Taxers are 
interested, primarily, in securing for the public the 
"unearned increment" of land values, due to the increase 
of population and wealth, they must remember that 
the farmer seldom gains large fortunes from this un- 
earned wealth. Occasionally, his farm may be broken 
up into town lots, and more often he may derive some 
profits from the construction of a railway in the vicin- 
ity, but even when fortune bestows her favors with an 
open hand, the unearned profits of the farmer fall 
below the unearned profits of a newspaper proprietor in 
a growing city. 

It seems, therefore, just and expedient to exempt; 
farming lands from a system of taxation that aims tc 
appropriate the "unearned increment" — the values cre- 
ated by society itself. Indeed , the greatest hindrance to 
the progress of the Single Tax movement lias been tlie 
opposition of the farmers. In the recent campaign in 
Missouri, the Single Taxers were repudiated by the 
farmers of the state, while in all campaigns for increas- 
ing taxation on land values it is the city population, 
with its large class of tenants, that furnishes the ad- 



THE SINGLE TAX. 127 

vanee guard for the Single Tax. In short, to the hard- 
headed fanner a tax that will ultimately appropriate 

the full value of his land must he a speeies of confisca- 
tion, even though we may call it by another name. And 
1 am firmly convinced that if the Single Taxers had 
confined their propaganda to city land, leaving the 
farmer untouched by their tax program, they would 
have already achieved a large measure of success. 

We might even admit that logical consistency would 
require the application of the Single Tax to all lands, 
and we could then rightfully answer that history does 
not always follow the strict line of logic. Furthermore, 
we can afford to sacrifice some degree of logical con- 
sistency for the sake of aiding in the development of a 
virile agricultural class.* Let our Single Tax friends, 
if they will, look upon the farmer as carrying a "far- 
mer's subsidy" from the state which would lighten the 
burdens of the tiller of the soil, while city land would 
be taxed to the full value. 

3 — Municipalization of Land Values. 

The most popular method for the introduction 
of the Single Tax has been demonstrated by the 
efforts (now illustrated in Canada and some of our 
Western states) towards the gradual increase of taxa- 
tion of land values, separate and distinct from build- 



* It is not our intention to free the farmer from all taxa- 
tion, for that would be unjust discrimination — intolerable in 
a true democracy. He would have to pay local taxes for the 
support of County and State government — and probably such 
taxation could be more justly assessed on the unim- 
proved land as the Single Taxers would have us do — but no 
attempt i^'ould be made to force him to pay over all the unearned 
increment of his land so long as it is classified as agricultural 
land. When such land becomes part of a growing town, however, 
it would be classified with respect to its population value. 



128 THE SOCIAL COMMONWEALTH, 

ings and other improvements on real estate. Even in 
the conservative city of New York there is a strong 
agitation to-day for increasing taxation on land at the 
same time that taxation on improvements is gradually 
reduced until the time should come when real estate 
taxation would comprise only land value taxation. 
(Even now the tax appraisers differentiate between 
(i) land values, and (2) valuation of improvements). 
The Lloyd George Budget in England amplifies this 
principle by imposing an extra tax on the "unearned 
increment" that will accrue to the landlords in the 
future. For example, a certain vacant lot in the City 
of London valued at £10,000 to-day might increase in 
value to £20,000 by the year 1920. In that event, the 
government would appropriate in 1920 a certain per- 
centum. of the £10,000 increase in value. 

The argument in favor of such a tax is based on the 
correct analysis that the increase in value is due solely 
to the efforts of the general public and not to the labor 
and skill of the landlord; and the government, repre- 
senting the whole people, is, therefore, justified in de- 
riving a partial benefit therefrom. This theory, if 
logically followed, requires the appropriation of ail 
such increase in land values for the benefit of the peo- 
ple, yet most Single Taxers hope to realize their aspira- 
tions by a gradual and slow method for increasing taxa- 
tion on land values. There is, however, one very serious 
objection to this method of a gradual development of a 
Single Tax state. Many decades must pass before the 
process is completed. Every advancing step will be 
hotly contested by those who must suffer from the 
heavier taxation. Intsead of one decisive battle for the 
realization of the dreams of Henry George, we are sub- 
stituting a long war, continuing through many decades, 



THE SINGLE TAX. 129 

subjecting society to a condition of constant strife, with 
the result ever in doubt; while our population will be- 
come divided into two classes, on the one hand, the 
landlords and their minions, and, on the other, tenants 
and their demagogues (with a small sprinkling of 
earnest men on each side). In this class war, every 
new attempt to increase taxation of land values will 
require an expensive campaign, so that the result will 
show only a small net gain, even if the public be vic- 
torious. Considering the constant turmoil of battle, 
the waste of resources in the numerous skirmishes, the 
bad blood that must be engendered from such a strug- 
gle between the masses and the classes, and, above all, 
the uncertainty of a valuable victory within a reason- 
able time, we may seriously question the advisability of 
such a method. And, in the end, we shall have achieved 
by a gradual, piecemeal confiscation what the early 
Single Taxers would have us do by one stroke. 

I stand with the old Single Taxers in my opposition 
to any piecemeal policy that must make it more difficult 
to realize the end, because of the continual increase of 
the "unearned increment" in the hands of present day 
landlords. We should establish a new land system out- 
right — but zve shoidd eliminate from our consideration 
any idea of confiscation. The man who has invested in 
real estate is entitled to protection of his property right, 
so long recognized by law, even as the manufacturer 
and the merchant. We shall now see how, by the appli- 
cation of the eminent domain power of the state, com- 
bined with a modified single tax on land values, we 
may secure all the benefits of a Single Tax regime, 
without the slightest infringement of property rights or 
the shadow of confiscatory methods. We skall call 
this the "Municipalization of Land Values." 



130 THE SOCIAL COMMONWEALTH. 

One of the most important rights and duties of mu- 
nicipal activity, as distinguished from rural life, would 
be the public ownership of land values. The initial step 
in such a program would be an amendment to the vil- 
lage, town and city laws of the various states whereby 
any district, containing a resident population of at least 
two thousand for each square mile, or portions thereof, 
would be forthwith organized as a municipality.* A 
uniform state law should provide for condemnation 
proceedings by which every municipality must acquire, 
by purchase, all vacant lands and all other lands (exclu- 
sive of buildings and improvements on real estate; 
within the confines of the municipality. The actual 
buildings (apartment houses, private dwellings and 
business structures) would still remain in the hands of 
private individuals, but the land upon which such im- 
provements are placed would become the property of 
the municipality. In like manner, the state law r should 
provide that all the old municipalities must become 
landlords of all the land within their boundaries by the 
judicial process of condemnation and purchase. Thus, 
the City of New York would be required to assume the 
ownership guilder condemnation proceedings) of all 
the land within its confines, and, similarly, some new 
little township, growing up in the Mohawk Valley, 
would, immediately on its organization as a municipal- 
ity, make itself the landlord of all the real estate (exclu- 



* Such a basis — two thousand persons per square mile — as 
a test for municipal activity is logical and proper, since such 
population usually represents a condition of urban, as op- 
posed to rural, life. It would place in the hands of the voters 
the rights and duties of city life just as soon as the density 
of the population would justify the organization of a mu- 
nicipal entity, distinct from the surrounding country dis- 
trict. 



THE SINGLE TAX. 131 

sive of improvements). Under such a system, every 
municipality, whether large or small, would receive all 
the benefits of a Single Tax regime, lor, as landlord, it 
would obtain in rents the full value of the land, while 
no private owner would be disturbed in the possession 
of buildings or other improvements. The municipality 
would be the owner simply of the land value, it would 
reserve for itself the "unearned increment'' due to the 
increase of population and wealth. 

But how do we propose to make our municipalities 
the landlords of their city territory without saddling 
them with debts which will lead to bankruptcy? In 
answer to such a question, we suggest a banking ex- 
pedient by which our municipalities will receive all the 
benefits of a Single Tax regime with practically no 
expense, and with full repayment to present day land- 
lords. The apparent miracle by which we may obtain 
invaluable rights at a small cost is based oil the principle 
of utilizing the difference between a higher credit and 
a lo-zeer credit in interest charges for the purpose of pay- 
ing off the principal sum. By the use of the higher 
credit of the state we can introduce a Single Tax era, 
and discard, at the same time, the idea of confiscation, 
which makes Single Tax objectionable to the great 
majority of citizens. 

Under such a plan, the state legislature would estab- 
lish a permanent land commission for the appraisal, 
condemnation and purchase, for the benefit of the var- 
ious municipalities, of all the lands within the limits of 
such cities, towns and villages. The state would issue 
bonds to cover the purchase price of the real estate of 
the various municipalities. The average state bond 
now carries interest at a rate of four and one half 
(4 T /j J< ) per cent per annum, or less, and the simple table 



132 THE SOCIAL COMMONWEALTH. 

that follows will show that, within a period of thirty- 
one years, all the bonds can be paid off, if only 6% of 
the original purchase price of all the lands appropriated 
by the municipalities, under condemnation proceed- 
ings, be accumulated each year for the payment of in- 
terest and the redemption of the bonds.* As the munici- 
palities would come into possession of the land immedi- 
ately, we can assume that the average income in rents 
from municipal lands would be at least 6% per annum 
— rarely would it fall below that figure, while the con- 
stant increase in land values would make it certain that, 
as a general rule, the income would exceed 6%. 

One and a half per cent (ij4%) each year will be 
utilized as a sinking fund for redemption of bonds, as 
shown in the last column, and four and one half per 
cent (4j4%) as interest on bonds. For convenience, 
in calculating the interest, more than $50 is regarded as 
equivalent to $100, and less than $50 as equivalent to o. 
After the year 1945, the payment of $27,500 for each 
one million dollars would clear the entire debt. 

In this table, outstanding bonds for $1,000,000 are 
taken as convenient figures. In the case of each larger 
city, the figures below would be multiplied by the 
number of million dollars of assessed valuation of the 
land, exclusive of improvements. If the plan were 
adopted in the year 1915, we would obtain the follow- 
ing results : 



* As a matter of fact, it could be so arranged that nearly all 
the "land bonds" would be taken up by the former landlords 
in payment for their land values. It might be urged that an ex- 
cessive bond issue by the state, to cover the lands purchased by 
the municipalities, would disorganize the bond market and de- 
preciate the value of state bonds. But it must be borne in mind 
that this process will be simultaneous with the liberation of 
capital formerly bound up in inconvertible real estate, and the 
former landlords will probably find no better immediate invest- 
ments than in safe state bonds at 4% per cent per annum. 





THE 


SINGLE TAX. 


133 




Amount of 




Amount of 




Bonds 




Bonds 




Outstanding 


Interest 


Redeemed 


i9i5 


$1,000,000 


$45,000 


$15,000 


igi6 


985,000 


44,300 


I5,7°° 


1917 


969,300 


43,6oo 


16,400 


1918 


952,900 


42,900 


17,100 


1919 


93 5, 800 


42,100 


17,900 


1920 


917,900 


41,300 


18,700 


1921 


899,200 


40,500 


19,500 


1922 


879,700 


39,6oo 


20,400 


1923 


859,3°° 


38,700 


21,300 


1924 


838,000 


37,700 


22,300 


1925 


815,700 


36,700 


23,300 


1926 


792,400 


35,700 


24,300 


1927 


768,100 


34,600 


25,400 


1928 


742,700 


33,400 


26,600 


1929 


716,100 


32,200 


27,800 


1930 


688,300 


31,000 


29,000 


193 1 


659,3°° 


29,700 


30,300 


1932 


629,000 


28,300 


31,700 


1933 


597,3°° 


26,900 


33,i°° 


1934 


• 564,200 


25,400 


34,600 


1935 


529,600 


23,800 


36,200 


1936 


493,400 


22,200 


37,800 


1937 


455,200 


20,500 


39,5°° 


1938 


415,700 


18,700 


41,300 


1939 


374,4°° 


16,800 


43,200 


1940 


331,200 


14,900 


45,100 


1941 


286,100 


12,900 


47,100 


1942 


239,000 


10,800 


49,200 


1943 


189,000 


8,500 


5i,5oo 


1944 


i37,5°° 


6,200 


53,8oo 


1945 


83,700 


3,800 


56,200 



134 THE SOCIAL COMMONWEALTH. 

In such a system, the credit of the state would be 
utilized to "underwrite" the debts of the various 
municipalities, so that the state bonds could bear a low 
interest rate. Within a generation all the bonds would 
be redeemed merely from the savings effected by util- 
ising the credit of the state (requiring an interest rate 
of 4%%) instead of the credit of private individuals 
or municipalities, which would require a higher rate. 

As a matter of fact, it is not so much the credit of 
the state that would enable us to pay an interest rate 
of 4/4%, but rather the concentrated security of city 
lots within its control. Thus, if any individual were to 
gain control of all the real estate, exclusive of improve- 
ments, within the City of New York, he, too, could 
probably dispose of 4^ % bonds to cover the purchase 
price, for he would have behind him the power and 
prestige of an enormous landlord. The same principle 
is illustrated when a mortgage is placed on property. 
The mortg*agee knows that his security consists solely 
in the value of a certain particular piece of property, 
and not in the general value of all the city real estate. 
Accordingly, the investor will seldom lend money on 
mortgage in excess of sixty or sixty-five per cent of 
the value of the property. But let us suppose that the 
mortgage extends not merely to a particular piece of 
property (which is always subject to decrease in value 
by the removal of business interests from one quarter 
of a city to another, by the loss in prestige of a certain 
ultra-fashiorable district, or b) r a mere freak of taste 
that prompts the better portion of a city population to 
avoid a certain residence district) but to the whole city 
real estate. In this case the security would be much 
more valuable. It is only on extremely rare occasions 
that the real estate of a city, taken as a whole, decreases 



THE SINGLE TAX. 135 

value, while the values of certain particular districts 
of every large and growing city are constantly rising 
and tailing- in the market.* 

[er the plan he each bondholder is 

j. red not only by the credit of the state but also 
(through the state) by the general value of city real 

ate within the confines of the municipality. While 
an investor might hesitate to lend on a mortgage up to 
75% of the value of a particular piece of real estate, he 
would probably feel far more safety in investing, to- 
gether with others, up to 100% of the value of city real 
estate, if he should have this security of a mortgage on 
all the real estate of the city. 

Since the basis of the whole system would be the land 
values in the control and power of the various munici- 
palities, we can feel sure that the state w r ould always 
have sufficient security for the outstanding bonds. Each 
city, town and village would be obliged to turn over 
annually to the state, for thirty-two years, all rents 
received from such lands to cover the interest and to 
furnish a sinking fund for the redemption of the state 
bonds. Perhaps in several towns there would prove to 
be a material decrease in land values, so that the rentals 
would fall below six (6%) per cent. Then the state, 
with its control, for thirty-two years, over all the mu- 
nicipal lands of the state, could easily raise sufficient 
revenue, from land values alone, to meet such isolated 
cases — for it is inconceivable that the city land values 



* Even in Manhattan real estate, supposedly the most "solid" 
of all, there has been a large decrease in value during the last 
few years in the district between 14th Street and Canal Street 
and on both sides of Broadway. This decrease, however, was 
more than compensated by the rapid growth in the value of 
real estate between 3oth Street and 42nd Street. 



136 THE SOCIAL COMMONWEALTH. 

of the state as a whole would decrease, although it may 

decrease very rapidly in certain localities.* 

The net result of such a plan as the above would be : 
( i ) The certainty of public ownership of municipal 
land values within a generation. This will mean that 
the city population would be able to control the growth 
and character of their own city, rather than leave it to 
the schemes of greedy landlords and the unregulated 
influx of tenants. As soon as the municipality becomes 
the owner of all land values, the city will not hesitate 
to erect boulevards, establish parks and playgrounds 
(for it will not be forced to compensate property own- 
ers for vacant lots), and what it will lose by the crea- 
tion of breathing places in one congested locality it will 
gain in increased rents from, other neighboring districts. 
The money and energy that is now expended on the 
establishment of a small park in a congested district 
will be utilized for important projects for the gen- 
eral welfare. 

(2) The appropriation, for the benefit of the public, 
of all the unearned increment due to the increase of 
land values in the interval from the date of the munici- 
palization of land values by condemnation proceedings 
until the final redemption of all outstanding bonds. 

(3) The assurance that we will receive all the bene- 
fits of a Single Tax regime — without the necessity of 
confiscating property or engaging in a class war. 

The Single Tax program would require a constant 
campaign during many years, until, step by step, we 
might reach the goal of taxation reform, in which all 

* Every census has shown a steady increase in the land values 
of every state in^ the Union. While there are a few cases in 
which the population of states have decreased in certain decades, 
the value of the land, and particularly of city lands, has never 
failed to advance. 



THE SINGLE TAX. 137 

lands would be taxed to their full rental value. Such a 
result might be secured only after many decades of toil 
and struggle. The victory might be purchased at a price 
— in campaign expenses, financial disturbances and even 
shed — that would far exceed the purchase price 
of such lands to-day. As a substitute for class war and 
confiscation, we have a simple project for land purchase 
which will offer us the same advantages without any of 
the disagreeable features of land taxation. We shall 
simply convert the public into the supreme landlord, 
instead of appealing to the taxation power of the state. 

It is just and proper that the residents of villages, 
towns and cities should reap the benefits accruing from 
the unearned increment due to the industry and ability 
of its inhabitants, and the municipalization of land 
values is a simple and effective method for achieving 
that result. The mineral resources of the State — the 
sub-surface value of state lands — should not become 
the exclusive property of any particular locality, since 
its value depends not on the efforts of the people of a 
particular locality but on the demand of the whole 
population. The state, therefore, should, by a process 
analogous to the purchase of municipal land values, 
acquire the ownership of all state sub-surface lands, the 
value of which depends primarily on mineral resources, 
water power, etc. The state itself need not necessarily 
operate all its mines or directly utilize all its water 
power, but it could lease these privileges (even as 
municipalities would receive ground rents) for the 
benefit of the whole population of the state. 

Finally, the farms of the state must remain the un- 
disturbed property of the rural population, if we are to 
maintain a free agricultural class as the backbone of 
our democracy. No state should restrict the farmer in 



138 THE SOCIAL COMMONWEALTH. 

the ownership of the surface value of land. The land 

problem would be solved by 

(i) th£ municipalization of city land values, and 

(2) the state ownership of mineral lands and water 
power sites, while 

(3) making no radical change with reference to the 
status of farming lands.* In the best days, the farmer 
receives very little of the "unearned increment/ 7 and 
that little we may well allow him as a chance reward 
for his steadfastness and as an appreciation of his value 
to the nation. As soon as the farm should become a 
portion of a village community, the land would be 
purchased by the new municipality. 

While this may give the farmer some unearned 
wealth, we can afford to be generous so long as we 
make it impossible: for any small group to become the 
landlords of a thickly populated city. The prime 
sources of unearned increment — city lands and mineral 
resources — would be under public ownership and con- 
trol, and this will offer us sufficient revenue to justify 
the rem: t onerous taxation (over and above the 

expenses incidental to local government) from the 
shoulders of those who produce our food supply. 

At this point it is necessary to consider the two con- 
tradictory views on taxation reform presented by Si: 
Taxers. On the one hand, they tell us that Single Tax 
does not mean the appropriation of all the land values, 
but "it proposes that the city should derive suffici 



* The state land commission would determine each year 
what rural districts have attained a population of two thou- 
sand per square mile (have reached the stage of development 
in which they may be regarded as urban or suburban prop- 
erty) 2nd would thereup ':ase such lands, by the issu- 
ance of state bonds, for the benefit of the new municipality 
to be erected or for some contiguous large city. 



THE SINGLE TAX. 139 

revenue from land value for its proper government, 
that the suite, too, should derive revenue from all land 
in the state including cities, and the federal government 
from all land of the country including naturally states 
and cities."* This, of course, may be less than the full 
value of unimproved land in the community. On the 
other hand, one of the leading Single Taxers, Herbert 
S. Bigelow, reverting to the argument that land belongs 
to God and that the whole community should reap the 
benefits, says (in "The Mission of a Liberal Church") : 
as one as good a natural right to the use of the 
ground as another ? If so, then should not every man 
pay to all the rest the full annual value of any particular 
piece of ground that he is permitted to possess?" The 
difference between these two views is hardly appre- 
ciated by the advocates of the Single Tax, because both 
views are presented indiscriminately by many of its 
leaders. Yet, one example will suffice to show that 
these two views are radically different. City A with 
a population of 100,000 people has a total annual gov- 
ernment expenditure (for schools, water supply, street 
cleaning and general city government) of three million 
dollars. The amount of taxation levied on the same 
community by Federal and State governments (assum- 
ing the general acceptance of the Single Tax) is one 
and a half million dollars. This would mean that the 
total amount raised annually by taxation on a Single 
ix basis would be four and a half million dollars. But 
the annual income from all the unimproved land of City 
A, if taxed at its full rental value, may exceed six mil- 
lion dollars. This remainder of one and a half million 
dollars or more is certainly the creation of the com- 



* From a statement by a well known Single Taxer, F. C. 
R. Douglas. 



140 THE SOCIAL COMMONWEALTH, 

uiunity, and is part of the unearned increment, but it 
may not be necessary to utilize it for government pur- 
poses. 

Accordingly, that which pertains to the support of 
local and central government should be borne by the 
farmer, in local and incidental taxation, as by every 
other citizen. But it well may be that if the people are 
far-sighted enough to purchase — under the plan of 
municipalization of land values — the city land, they 
may find a source of income as a landlord that will 
make it unnecessary to tax any citizen. Government, 
instead of appearing as a parasite thai feeds o*fh the 
community, will become self -supporting. The city will 
receive an annual income as a landlord more than suf- 
ficient for current expenses and will have a surplus to 
be expended for the benefit of its citizen-tenants. Most 
states will receive annual incomes from the sub-sur- 
face lands sufficient to. dispense with any taxation. 
(We are not here concerned with the Federal govern- 
ment, although it, too, could derive a large portion of 
its expenses from careful utilization of the land within 
its control.) The farmer as well as the city inhabitant 
would pay, if necessary, taxation to cover the local 
expenses of county and state government, unless the 
income of the state is so large that it could undertake 
the burden of the cost of county government within its 
borders. In short, we would remove taxation (or re- 
duce it to a minimum) not only from the farmer but 
from every citizen, whether he be a dweller of a large 
city or a pioneer settler on a wild tract of land. Finally, 
we go further than the Single Taxers — we want no 
tax. We propose to make our municipalities thrifty 
landlords who- will simply collect rents instead of ex- 
acting taxes. 



THE SINGLE TAX. 141 

Such a pJan can be carried out without any radical 
changes and with very little disturbance. The first step 
would be to convince the voters of one of our states to 
place a law on the statute books (and amend the state 
constitution when necessary) which would permit the 
state to condemn and purchase all mineral lands and 
water power sites, and oblige all the municipalities 
within its borders to municipalize all land values, state 
bonds being issued to complete the purchase. Some of 
our Western States that are sufficiently progressive to 
experiment with new devices for securing greater in- 
dustrial and political freedom might convert this rea- 
sonable substitute for the Single Tax into a living fact. 
Let but one state introduce this system and the 
pressure of a triumphant idea will insure its prog- 
ress throughout the country. 

To those who tell us that this would make the state 
and city paternalistic institutions, we reply that hith- 
erto government has been a poor father that demanded 
support from his children through the method of taxa- 
tion. We propose to make him a rich father who will 
be independent of the enforced gifts of his sons and 
daughters — a father that may have some surplus to 
devote to the higher education of his off-spring and 
for the fulfillment of some of the nobler aspirations of 
mankind. 



CHAPTE 

The End rsTRiAL Commonwealth* 

:— - i ublic Competiti 

iring the last six decades. Socialism has proclaimed 
the social aspect of history. The great- 
est contribution of Socialis i been the formulation 
the theory <<i the "Economic Interpretation of His- 
the destructive i nslau jhts made by its lead- 
s on our competitive system of industry. In its place. 
nstruct a system of state ownership 
of all the social tools of ] It ; - to the c 
structive part of its ] rogram — to the actual upbuilding 
fa S< cialisl State — that we take exception, for the 
reasons stated in Chapter VIII. Instead of a state own- 
ship, thai I cripple individual initiative and 
hamper voluntary co-operative efforts, we propo c e to 
build Tl ia] Cofnmonwealth. The essence of such 

'■■■: •' - of a voluntary m- 
not to the ex :lusi : of individual in- 
itiative I ut : "~ competition with the activities of private 
individual-. 

Such a ' m does not require the introduction of 

new and untried social institutions and political device-. 

thin the last two decades the Commonwealth of 

Australia and the Government of Xew Zealand have 

conducted numerous experiments in "Government 

rnpetition." Xew Zealand has become a real estate 

orator, for the government sells land to settlers, with 

prr for payment on the installment plan, and 

money on r eal estate mortgages. In Australia. 

the government has made some successful efforts in 



144 THE SOCIAL COMMONWEALTH, 

the manufacture and sale of ice in competition wifeh 
the activities of private individuals. We are not now 
discussing whether such government activities are alto- 
gether wise and beneficent. Numerous criticisms have 
been hurled against the "Socialistic" efforts of Aus- 
tralia and New Zealand. Even radical labor leaders 
have disagreed time and again with the industrial ex- 
periments in Australasia. Yet, however much we may 
disagree with certain practical efforts, we must honor 
these colonists of Great Britain for having brought 
forth a new principle in industrial life. I refer to the 
principle of "Government Competition." The state, 
by entering into the business of manufacturing and 
selling ice, for example, compels all other ice dealers to 
dispose of their products at a moderate profit ; the gov- 
ernment, by engaging in the business of fire and life in- 
surance, secures for the people the very best terms, 
because the private and mutual companies must face 
the healthy competition of the government. 

In short, it is not so much what the government does, 
as what it might do — its potential power— that restrains 
private enterprise within the limits of reasonable prof- 
its. Once the principle of "Government Competition" 
is thoroughly appreciated, there can be no grinding 
monopoly, for the government may step in at any time 
and compete with any business for the protection of 
the public. 

Analogous to this "Government Competition," but 
superior to it in many respects, is the "Public Compe- 
tition," introduced by Louis D. Brandeis, in the State 
'of Massachusetts. In 1906, he began to advocate 
a system of Savings Bank Life Insurance under 
the supervision and control of the state. Mr. 
Brandeis had investigated the insurance rates of 



THE INDUSTRIAL COMMONWEALTH 145 

the chief companies issuing industrial life insur- 
ance policies (i. e., life insurance in which the pre- 
miums are paid in small sums at short intervals, usu- 
ally weekly, to meet the demands of the working peo- 
ple), and, after a careful study of the figures, had con- 
cluded that these companies (particularly the Metropol- 
itan Life, The Prudential and the John Hancock) were 
charging exorbitant rates. Accordingly, he strongly 
advocated the enactment of a law which would permit 
the Savings Banks of Massachusetts, under state super- 
vision, to issue life insurance policies, under a uniform 
plan, in competition with the large industrial insurance 
companies. On June 26th, 1907, such a law was passed 
by the legislature of Massachusetts, and the following 
results have been obtained (by September, 19 12) : 

( 1 ) Four Savings Banks have opened insurance de- 
partments, and such banks have profited by a rapid in- 
crease in deposits. 

(2) The monthly premium rates of the policies is- 
sued by the Savings Banks, including a dividend (for 
each policy holder receives the dividend which would 
fall to the stockholder in the ordinary insurance com- 
pany), is 32% less than the reduced rates of industrial 
companies. Even when compared with non-industrial 
companies, a man thirty years of age pays $20.64 per 
annum for $1000 on a "straight life" policy under 
Savings Bank Insurance and $24.38 with the New 
York Life. 

(3) Most important of all, the competition of Sav- 
ings Bank Insurance has compelled the industrial com- 
panies to reduce their rates, so that, on the average, the 
rates are to-day 20% lower than in September, 1906. 

This means a savings to the working people of Mas- 
sachusetts alone of two million dollars ($2,000,000) 



146 THE SOCIAL COMMONWEALTH. 

per year, and an annual saving to the working people 

of the United States of about twenty million dollars 

($20,000,000). 

In short, this public activity, through the medium of 
Savings Banks, has bestowed concrete benefits on the 
people of Massachusetts which could never have been 
secured by expensive "fishing expeditions" in "trust- 
busting," and ruthless denunciation of the "bad men of 
Wall Street." 

The plan advocated and put into effect by Mr. Bran- 
deis is far more valuable than the social experiments in 
Australasia. The latter are purely governmental ef- 
forts, having behind them the coercive power of the 
state, which may crush out individual initiative, so that 
we may gradually drift into a s)^stem of State Social- 
ism. The Brandeis plan involves the principle of 
public, rather than governmental, competition. The 
state encourages and supervises the Savings Bank In- 
surance, but it does not actively engage in competitive 
industrial activity. If such public efforts in competi- 
tion with private enterprise should succeed — as they 
have succeeded in Massachusetts — then the public will 
derive large benefits; but such public efforts will have 
to meet, constantly, the competition of private initia- 
tive, and zuill not be bolstered rip by the taxation power 
of the slate — as may be the case with "Government 
Competition:' In short, in place of government com- 
petition, we have a system of "Public Competition/' 
supported and encouraged by the government. 

I am. convinced that an. extension and modification of 
the Brandeis plan for Savings Bank Insurance will offer 
us a fruitful field for public' competition, which will be 
of invaluable aid in the solution of the "Trust Prob- 
lem" and the problem of the high cost of living. Indeed, 



THE INDUSTRIAL COMMONWEALTH 147 

it offers the prospect of organizing a co-operative so- 
ciety on a voluntary basis, for the purpose of uplifting 
our whole industrial life.* 

2— Political and Economic Function of the Municipality. 

While the Industrial Commonwealth will be organ- 
ized as a large people's corporation on the principle of 
public competition, we must pay particular attention to 
our urban population. Our cities and towns present, 
in some respects, the nuclei for small industrial dem- 
ocracies. Their powers as coercive governmental in- 
stitutions are insignificant, and they may be regarded as 
the introduction to voluntary associations for numerous 
economic activities on behalf of their citizens. 

In Law, municipal corporations have two well de- 
fined fields of activity. The first is known as the public 
function, i. e., the field in which the city acts purely as 
"the arm" of the state. The police power, the control 
of the Health Department and the Bureau of Education 
fall under this category. In this division, the munici- 
pality is merely the most convenient means for per- 
forming the duties that fall to the state government, 
and might be legally (and efficiently) performed by the 
state itself, the various counties or other agencies. 

As distinguished from this public or political function 
of the municipality, we have the private duties which 
the state permits it to assume — the business interests 
analogous to the operations of private corporations. 



* Surprising as it may seem, such a program is in accordance 
with the hopes of the Syndicalists (known in the United States 
as the Industrial Workers of the World). Whether or not we 
indorse sabotage, or the concrete demands of the I. W. W. in 
any particular strike, there is no question but that the under- 
lying economic principle of the I. W. W. — namely, the organiza- 
tion of a co-operative economic society on a voluntary basis — is 
more feasible and desirable than a coercive Socialist State. 



148 THE SOCIAL COMMONWEALTH. 

Under this subdivision arc included such important 
matters as the water supply, the operation of ferries, 
the construction and operation of subways, bridges, 
street cars and municipal markets. The municipality 
may engage in numerous activities that are of interest 
and advantage to its inhabitants, and which would 
otherwise be performed by private individuals, associa- 
tions or corporations. 

Now these two functions of the municipality are as 
separate and distinct as politics and business. While 
the public function of the municipality is merely a con- 
venient subdivision of the political power of the state, 
the private function ministers to the needs and com- 
fort of its inhabitants. While the first must be 
properly performed in order to safeguard society 
and protect civilization (as, for example, adequate 
police protection, proper health supervision and a mini- 
mum of education), the second is purely a business 
matter for the better satisfaction of the wants of the 
city population. While the element of profit is of no 
significance in the political function of the municipality, 
it is of the utmost importance in the consideration of 
questions arising under the private (or business) 
function of the city. 

It would be in accordance with the demands of logic, 
as well as of "scientific management" in business and 
politics, to separate these two dissimilar activities. The 
political functions should be performed by county offi- 
cials (the District Attorney and Sheriff now perform a 
large portion of such duties) since the county is exclu- 
sively the "political arm" of the state and could readily 
assume the present day political functions of munici- 
palities. On the other hand, the large and increasing- 
number of private functions of municipalities involve 



THE INDUSTRIAL COMMONWEALTH 149 

all die elements of true business activity, and it is high 
time that such duties be placed under proper business 
management and separated from political chicanery. As 
they are, or should be, essentially profit producing en- 
terprises, they must be placed on a sound economic 
basis of business management. 

The trend of the times is towards such a differentia- 
tion between the private and public functions of munici- 
pal life. We have heard a great deal during the last 
decade, about the "commission form of government" — 
a plan by which cities are efficiently managed by a 
single board of directors (consisting usually of five 
members) analogous to the methods of private cor- 
porations. It has not been altogether a conscious 
growth, yet the popularity of commission government 
is due, in a large measure, to the recognition by the 
great mass of citizens that the main functions of a 
municipality are economic and not political. For the 
sake both of efficiency and consistency we should sur- 
render to the state and its counties the remaining politi- 
cal powers of our cities and towns, while we permit our 
municipalities to grow into important business enter- 
prises for the benefit of all the residents. 

We are not interested in the political form of the 
state or county, but the business form of the munici- 
pality is probably best expressed in the commission 
plan. For the municipality is simply a corporation in 
which every resident citizen has one share; and, as 
equal shareholders, they should elect a Board of Direc- 
tors to manage the common business enterprise and 1 
protect the property of all the shareholders. Every vil- 
lage, town and city would be managed by such a board 
of five members (which might be decreased to three in 
the case of small towns or increased to seven in the case 



150 THE SOCIAL COMMONWEALTH. 

of very large cities), elected for a period of two or 
four years. 

3 — The Municipality and Public Competition. 

What should be the scope of activity of the munici- 
pality? This is the crucial question that brings forth 
the old problem of "State Interference," of "Laissez- 
faire" and "Socialism." 

It has been the unfortunate practice in American 
states to restrict the activities of municipalities within 
narrow limits, until the urban population is now exas- 
perated by the constant interference of state legislators, 
representing country districts, and possessing little 
qualifications for passing judgment on city problems. 
The mere concentration of population on a small area 
gives rise to- problems that differ materially, not only in 
degree but also in kind, from, the problems of farmers 
and cowboys. In agricultural communities there are no 
problems of street traffic, of tenement house abuses, of 
sweat shops and "tenderloins." Yet the state law- 
makers have so- long failed to recognize this difference, 
that the cry of "city home rule" has become irresistible. 
In foreign countries, as a general rule, cities are given 
pretty nearly free scope in their operations, so that we 
may learn valuable lessons from the German cities that 
build, own and sub-let model houses, from English 
cities and towns that own and operate street car lines 
and municipal markets, and from other activities too 
numerous to mention. Even in the United States, 
several states (notably Missouri) recognize "local self- 
government" as an inherent right in a community; and 
in those states each city may determine for itself, to a 
large extent, the field of its industrial activity. Our 
first endeavor should be to place in the Constitution of 



THE INDUSTR] \L COMMONWEALTH 151 

y state a provision guaranteeing home rule and 
self-government to any eonnnuuity having a popu- 
lation of a certain density (let us say, at least two thou- 
sand persons, on the average, for each square mile of 
territory). Such a law would convert the municipality 
into a voluntary public corporation, ever mindful of the 
ests of its resident citizens. Undoubtedly, its first 
duty will be to endeavor to reduce the cost of living 
for its inhabitants, by public efforts in the form, of 
municipal markets, city milk depots, restaurants, as 
well as the ownership and operation of the telephone 
and transportation systems of the city. 

The question still remains : how much business will 

our municipalities transact — how many different things 

will they do? Hardly any one will dissent from the 

conclusion that the municipality should manage its own 

water-supply. To-day, some might still question 

whether it be advisable to have municipal ownership 

and operation of the transportation system, while the 

great majority would he opposed to the extension of 

icipal activities into the fields of finance, manufac- 

nmerce. Are we to say that these munici- 

[ertake all activities as an introduction 

unicipal Socialism? It ma}' be that the adoption 

of municipal home rule would facilitate the public own- 

peration of many industries, and enable us 

to achieve industrial ! without the danger or 

political corruption. But wc should certainly oppose 
municipalization" ■ 1 life of the city 

—the swallowing up of all economic activities by t 1 ie 
urban unit. 

Where should be the hoe limiting the activi- 
ties of the municipalities on the principle of public com- 
petition? Frankly, we do not know. We cannot 



152 THE SOCIAL COMMONWEALTH, 

know. It is a shifting line that changes from age to 
age. Socialism would obliterate the line, and make ail 
production communal, even as anarchism would deify 
individual activity. But here lies the great distinction 
between a Social Commonwealth and Socialist 
schemes. We do not know, and as true scientists we 
cannot know, the proper limit of co-operative activity 
as compared with individual activity. The line sepa- 
rating the two fields must be reconstructed, generation 
after generation, in accordance with the demands of 
the time and the changes in environment. This is 
essentially an evolutionary process and the survival of 
the system tJtat proves most efficient is assured. Only 
experimentation will give us the proper field and true 
limits for municipal activity. Should the municipality 
own and operate dairies and bake-shops? That ques- 
tion can be decided properly only after trial, and after 
careful comparison with individual enterprises in the 
same fields. A similar answer must be made to the ques- 
tion : should the municipality own and operate an elec- 
tric plant ? municipal markets ? The ideal of Socialism 
is complete ownership of all the social tools of produc- 
tion and thorough-going co-operation in industry. All 
the actions and manoeuvres of its leaders have this 
result as "the consummation devoutly to be wished." 
Now, such a principle may be applicable in all activities 
that tend to become monopolies, that by nature or cir- 
cumstances (like the street railway system) can be 
profitably managed only under monopolistic control. 
But there are many other activities in which monopoly 
is not essential for profitable management. Consolida- 
tion and concentration in the ownership and operation 
of restaurants and hotels and in the manufacture of 
clothing (for example) may yield good economic re- 



THE INDUSTRIAL COMMONWEALTH 153 

turns, but absolute monopoly in these lines is not essen 
tial to success. A large plant may be necessary in order 
to secure the economic savings that can be obtained only 
from large scale production and distribution, but you 
may have several large plants and still reap the benefits 
of concentration. We may, therefore, lay down the 
general principle :that the activities of our municipalities 
should be, not to the exclusion of, but in competition 
with, individual initiative, except in cases of natural 
monopolies (like the street railway system). 

In short, each municipality must be viewed as an 
independent corporation, and, as such, it has the right 
to undertake any business that may prove of advantage 
to its citizen-shareholders. How far it shall go in any 
particular field — whether in transportation, commerce 
or manufacture — is purely a matter of business, a ques- 
tion of profit and loss. It will enter into any field 
where there seems to be fair prospects of success, and 
it will abandon any business when it becomes unprofit- 
able. We shall allow our public corporation, the 
municipality, to compete with the business of private 
corporations and individuals, confident that such a 
healthful competition will determine the proper field for 
the activity of each. The future will probably show us 
cities and towns in w T hich the municipality will under- 
take certain activities (like street railways, electric 
lighting plants, etc.) without interference from private 
corporations; other fields of economic activity (like the 
manufacture and sale of jewelry, expensive furniture 
and other articles of luxury) would be left exclusively 
to private initiative, because the municipality would not 
enter such speculative business ; and an important part 
of industrial life (comprising, particularly, the produc- 
tion and distribution of the necessities of life) wouH 



154 THE SOCIAL COMMONWEALTH, 

remain in which both the municipality and private inter- 
ests would find ample opportunity for profit. Further- 
more, competition between private and public business 
will give us the proper limits for each, and it would not 
be long before each municipality would find the various 
business enterprises for which it is best fitted. This 
method will offer us, at the same time, a test for the 
value of public enterprises, and a wholesome check on 
the greed of private business by the fear of the com- 
petition of the public corporation — the municipality. 

We shall endeavor not to destroy profit but to help 
distribute it through the public corporation; not to 
monopolize industry but to raise its plane through the 
competition of an efficient co-operative corporation ; not 
to make the rich poorer but to make the poor richer. 

Our plan would make the city only an economic 
entity, distinct from any political power. The Munici- 
pal Corporation zvmtld have no power of taxation, for 
its income as a landlord w r ould be the basis of its indus- 
trial life. (The power of taxation now vested in city 
government would be transferred to the state and the 
county together with the political powers previously 
mentioned). As a result, the city could not afford to 
engage in unprofitable industry, for the purpose merely 
of crushing individual enterprise, with the prospect of 
recouping itself from taxation. It would be compelled 
to hold in view the elements of profit and loss. Repre- 
senting the consumer, it would strive to engage in 
industrial activity that would be of prime importance 
to the city population. Whenever any individual or 
group of citizens would attempt to raise, arbitrarily, the 
price of the necessities of life, the wholesome competi- 
tion of the municipality as a consumers' league, organ- 
ized primarily for the protection of the citizens, would 



THE INDUSTRIAL COMMONWEALTH 1SS 

be an important factor in re-establishing equilibrium in 
industry. The municipalities would, therefore, operate 
not only as valuable co-operative machines but also as 
emergency brakes to regulate and moderate the greed 
of captains of industry. 

Such a concept of municipal ownership, in which the 
city will undertake anything and everything that may 
be of value to its citizens, does not demand that we pa- 
tiently await the introduction of "Single Tax/' or even 
"Municipalization of Land Values/' but may gradually 
be introduced from day to day until the city becomes a 
large citizen-shareholders community. 

4 — Co-operation in Distribution and the Industrial 
C ommonzvealth. 

In our discussion hitherto, we have omitted any con- 
sideration of the status of the farmer as an integral 
part of our industrial system, although we must admit 
that the rural population is the backbone of our eco- 
>~iic life. Can we assist the farmers of the nation to 
make agricultural life more attractive and the rewards 
greater and more certain ? 

Recent experiments have indicated the path along 
which farming communities must be developed in order 
to achieve the best results. We need rot seek for ccw 
plicated schemes or radical reforms. In several coun 
tries of Europe (particularly in Denmark), the farmers 
have developed strong co-operative associations for the 
purpose of collective buying and selling. The farmers 
unite in huge organizations (resembling somewhat the 
"Granges" of our own country) to which they forward 
all the cheese, butter, eggs, etc. (over and above the 
portion which they retain for home use). The associa- 
tion then acts as a selling- agency, disposing of the prod- 



156 THE SOCIAL COMMONWEALTH, 

ucts in the best markets and awarding to the farmer 
the sum due him in proportion to the amount of prod- 
ucts of each — after deducting the actual expenses in- 
curred by the association. This association, because of 
its large activities, is enabled to secure the services of 
experts, to engage the most competent sales-agents and 
to save to its members the profits accruing from trans- 
portation on a large scale. 

The same association acts, likewise, as a buying 
agency in purchasing costly machinery, including agri- 
cultural implements with the latest improvements — 
which the individual farmer would not be able to secure 
because of the high cost. Such machinery may then be 
/utilized by the various members of the association on 
the payment of a small rental to defray the expenses 
actually incurred. In short, co-operative associations 
of farmers retain the principle of competition among 
their members for the purpose of encouraging each to 
increase his products (and thus obtain a larger share of 
the profits), while adopting the principle of co-opera- 
tion as against the outside world, so as to eliminate cut- 
throat competition and insure stability and progress. 

There is a logical basis which justifies the existence 
of these farmers' associations as economic units. Un- 
like co-operative manufacturing establishments, these 
associations do not restrict individual initiative; and 
they differ from communistic schemes, for the latter 
sanction the dangerous principle of equal reward for 
unequal effort and unequal productivity. A co-opera- 
tive association of farmers does not place any hin- 
drance upon individual ingenuity and individual per- 
severance. It merely consolidates and co-ordinates 
these forces into a successful co-operative scheme. 
While such efforts might be viewed as "socialistic/' 



THE INDUSTRIAL COMMONWEALTH 157 

since they mark a distinct step in co-operation as dis- 
§^uished from haphazard competition, these associa- 
te are, nevertheless, compatible with competitive in- 
tend directly to preserve competition within 
of each association. We are, therefore, jus- 
tified in concluding- that co-operative farming commun- 
ities are utterly unlike co-operative manufacturing- 
plants. The former encourage individual enterprise, 
while the latter rely for success almost exclusively upon 
co-operative efforts. To put the matter concretely : each 
farmer member of a co-operative association must know- 
that his reward will depend almost exclusively upon his 
individual industry (and his own good fortune), while 
the worker in a co-operative factor}' must soon come to 
the conclusion that his welfare depends only in a very 
small degree on his own efforts and to a large degree 
upon the industry of his fellow-workingmen. For ex- 
ample, if there be one hundred factor}' hands, the in- 
dustry and honest labor of one will count for little if 
the remaining ninety-nine be shiftless and unfaithful. 
In order to establish a highly successful manufacturing- 
community based upon co-operation, we must first de- 
velop the unselfish spirit of co-operation to such a de- 
gree that each individual will work with the same intel- 
ligence and energy for his neighbors and comrades as 
for his own family. This will require such a trans- 
nation in individual character as may need decades 
for its completion. But we can successfully institute 
-operative associations for farmers in our own day, 
since we can utilize not only the unselfish motives of the 
idealist but also the selfish promptings for individual 
success that seem to form the basis of business enter- 
prise at the present time. 

Such co-operative 5 of farmers differ, nol 



158 THE SOCIAL COMMONWEALTH, 

only in degree but also in kind, from the numerous 
co-operative schemes familiar to us in commercial life 
— in profit sharing, trade unionist enterprises and capi- 
tal-labor trusts. In the latter, co-operation extends to 
the field of production, while in granges 
whole process of production is left to individual initi- 
ative, and co-operation extends simply to the field of 
distribution of the things produced. This system of 
"co-operative distribution" enables the farmer to pre- 
serve the benefits of individual initiative and the incen- 
tive for profit, while it secures for him the advantages 
of large scale industry in distribution — in marketing his 
products. When it is recalled that the great cry of the 
farmers to-day is that the middleman secures the profits 
that cause the high cost of living, and that, between the 
farmer and the consumer, nearfy 100% is added to the 
price of the farmer's commodity, we can readily ascer- 
tain the importance and value of co-operative distribu- 
tion to the agricultural community. 

Can we establish an institution which will protect the 
farmers of our country and, while advancing their in- 
terests, also safeguard the community as a whole — the 
consumers of the nation? We believe that such an 
Association can be successfully organized and profitably 
managed on the principle of a huge consumers' league. 
The method for the organization of such a farmers' 
and consumers' alliance is of secondary importance 
provided the principle be firmly established. The fun- 
damental basis of this association would be that while 
farmers affiliated witli it would receive the full value 
for their products, at the same time, all of its mem- 
bers, as consumers, woxdd receive dividends or rebates 
in proportion to all purchases from, and payments made 
to, the association. 



THE I X I H STRIA1 COMMONWEALTH LS9 

i itizen oj the I T nited Stales would be eligible 
for membership into cm incorporated association to be 
designated as the Industrial Commonwealth — follow- 
ing the general plan outlined in connection with the 
Labor Commonwealth (Part I). Each member would 
be required to pay a small sum as an entrance fee (let 
us say, live dollars), and the Association might issue 
bonds, bearing interest (in accordance with modern 
day financial usage), to enable it to undertake and con- 
duct various economic activities. 

The first function of the Industrial Commonwealth 
would be to endeavor to* fulfill, in the highest degree 
and in the best manner, the duties of a co-operative 
institution for the benefit and advantage of farmers. 
Every member of the Industrial Commonwealth, who 
is also a farmer, would be offered the opportunity of 
entering into a contract with the Association wherein 
the latter zvould bind itself to purchase from the farmer 
all products of his farm (over and above that which is 
necessary for the personal use of the farmer and his 
family). These contracts would run for periods of 
several (let us say, four) years and would be renew- 
able for like periods at the end of each term. A Board 
of Appraisers, representing the farmers and the asso- 
ciation, would determine, at the beginning of each 
month, the market prices for all farmers' produce dur- 
ing the month, and the farmers would be required to 
turn over all the products to the Association at prices 
fixed by this Board. This would offer a secure market 
for farm products, while it zvould form the basis upon 
which the Industrial Commonwealth might undertake 
activities in commerce and manufacture. 

All the available profits of the Association (over and 
above a necessary reserve fund) would be divided semi- 



160 THE SOCIAL COMMONWEALTH. 

annually among the members, in proportion to the 
amount expended by each in payments made to the 
Industrial Commonwealth. Thus, one member whose 
record for a period of six months will show an ex- 
penditure by him of, let us say, one thousand dollars 
($1,000) for goods secured from the association 
(whether for rent paid to the Association for the occu- 
pation of a house owned by the Industrial Common- 
wealth, railroad tickets purchased for travel on a rail- 
way belonging to the Association, theatre tickets, cloth- 
ing or groceries under the control of the Industrial 
Commonwealth) will receive a dividend or rebate ten 
times as much as another member with a record of 
expenditures of only one hundred dollars ($100). 
The amount of purchases might be kept and the rebates 
determined by a simple method of trading stamps, al- 
lotted to each buyer whenever moneys are paid to the 
Industrial Commonwealth. 

In a short time, the association would become more 
than a mere instrument for effective buying and selling. 
It could develop a valuable agricultural credit system, 
experiment with model farms as training schools for 
its members and their children, and do many other 
things to enhance thevalue of the farm. In short, we 
should accept for the Industrial Commonwealth the 
same principle of business management as that applied 
to Municipal Corporations : the organization may un- 
dertake any business which it deems of interest and 
profit to its members. Just as long as membership 
will be open to every citizen, we can be sure that the 
association will be slow to undertake any new activity 
unless it is almost certain to prove of great advantage 
to the farmers and the consumers. 

Furthermore, in order to give to the Industrial Com- 



THE INDUSTRIAL COMMONWEALTH 161 

momvealth some common interest which would attract 
a large membership, efforts should be made to secure, 
from the various states, leases of those state lands that 
are important primarily for their sub-surface value — 
mines, oil fields and water-power sites. The states 
would, of course, derive annual rents or taxes from 
such lands (just as the Municipal Corporation would 
receive rent from ownership of the land value of the 
town or city), so that the people of the entire state 
would share in the profits of state lands, while to the 
Industrial Commonwealth would be given the task of 
developing the resources of the states. 

The interstate activities of the Industrial Common- 
wealth would be determined on the same principles ap- 
plicable to Municipal Corporations. It will assume the 
ownership and operation of one or more railways only 
when these can be profitably managed. As a matter of 
course, it will enter the fields of fire, life and accident 
insurance and any other large enterprise which may be 
of advantage to its members — always in competition 
with the efforts of private individuals. 

Finally, the Industrial Commonwealth will be a 
free Commonwealth. No one will be compelled to join 
its ranks, for any citizen may abstain from member- 
ship in the Industrial Commonwealth. This association 
will be a free society in contradistinction to any Social- 
ist scheme that would coerce its members and appor- 
tion employm.net and rewards. It would not seek to 
monopolize industry or to "seize all the means of pro- 
duction," but rather to create a public monopoly only 
of those industries, which, by nature and social de- 
mands, must continue to remain monopolies, while it 
would compete with private enterprise in many other 



162 THE SOCIAL COMMONWEALTH, 

industries for the benefit and profit of the consumers of 
the nation. 

It would meet the objections urged by Thoreau and 
Tolstoi, for none would be forced to become affiliated 
ivith this Commonwealth. It would not be a 
political organization but an economic institution, 
growing with the problems of the age and developing 
independently of political embroilments — a Common- 
wealth that must meet with the approval of all earnest 
students of social problems. 

The Industrial Commonwealth would, therefore, be 
controlled by members, consisting- exclusively of citi- 
zens, and its general purpose w r ould be to undertake 
business enterprises that could be performed to better 
advantage by a public corporation than by private indi- 
viduals. What these activities will be we cannot now 
determine. It is sufficient for us to adopt as our guide 
the principle of a public corporation in competition 
with private business, and permit our new interstate 
corporation to engage in any business that may be of 
profit or advantage to its members. 

The general management of the Industrial Common- 
wealth would be vested in a Board of Directors of nine 
members, six of whom would be elected by the mem- 
bers of the association (three chosen every even num- 
bered year for a period of four years) and three other 
members to represent the Government of the United 
States. The latter might consist of the Vice-President, 
the Secretary of Agriculture and the Secretary of Com- 
merce. One of the essential features of the constitution 
of the Industrial Commonwealth would be that: every 
measure, to be adopted, must receive the support of a 
majority of the Board of Directors, which majority 
must include at least two of the members representing 



THE INDUSTRIAL COMMONWEALTH 163 

the government. Such an arrangement would afford 
sufficient protection to the public interest, because of the 
active participation of high government officials, with 
the right to veto legislation — to serve as the old time 
tribunes of the people who might step in and annul a 
course of action that is detrimental to> the people as a 
whole. The Vice-President is the proper person to act 
as the chairman of the Board of Directors of the Indus- 
trial Commonwealth — it would offer him a field of use- 
fulness second only to that of the President of the 
United States. 

Such an Industrial Commonwealth, founded on the 
principles of economics, and freed from political in- 
trigue, should prove as effective in its field as the mod- 
ern "trust" now is in the business world. For, in spite 
of all the recent clamor against the evils of corpora- 
tions, we must not forget that, judged by the standard 
of results, the corporation has been an eminently suc- 
cessful institution. It is not the province of a corpora- 
tion to exert a beneficent influence on politics, nor 
should it be viewed as an institution for the promotion 
of the public welfare. But if we accept the aims of 
the founders of our great corporations — namely, to 
secure dividends, and to protect the interests of its 
shareholders — we must concede that the main purposes 
have been achieved. Here and there w r e may discern 
the vicious workings of an inner coterie of directors, 
who, in their own selfish interest, defraud the stock- 
holders ; but such cases are rare and tend only to prove 
the rule that large corporations have been eminently 
successful in obtaining profits for their shareholders. 
And one strong reason for such success is the unity of 
purpose and of management. Instead of divisions of 
power and restrictions of control, of multiplicity of pur- 



164 THE SOCIAL COMMONWEALTH. 

poses so manifest in our political activity, the method 
of management in the corporation is simplicity itself. 
A single Board of Directors, chosen by the stockhold- 
ers, manages the entire business enterprise with an eye 
purely for profits. Assuming that our Industrial Com- 
monwealth would be organized in a similar manner, we 
may conclude that the Board of Directors will protect 
and augment the interests of its shareholders — the 
citizens of our country. 

5 — A Consumers' League. 

There is one general principle which is at the basis 
of both the Municipal Corporations and the Industrial 
Commonwealth. It forms the connecting link between 
city and national organizations for the upbuilding of 
a better industrial system. I refer to the principle of 
co-operation in distribution for the benefit of consumers. 

The modern competitive system of industry gives us 
a heartless struggle for existence that entails enormous 
waste both of profits and human life ; while Socialism 
offers us a system of co-operation in production to the 
exclusion of individual initiative. The latter would re- 
duce society to the dead level of existence, dangerous to 
economic progress, because there is no assurance that it 
would produce an economic surplus essential to enlight- 
ened society. In short, our problem is to ascertain 
whether we can re-organize our industrial system so as 
to avoid some of the gross waste of present day com- 
petition, and, at the same time, secure a more equitable 
distribution of wealth without destroying the incentive 
for gain and material welfare. Can we retain the bene- 
fits of competition while substituting, for the disadvan- 
tages of unemployment and poverty, the invaluable 
gifts of contentment and security ? 



THE INDUSTRIAL COMMONWEALTH 165 

Various attempts have been made to solve this prob- 
lem by systems of profit sharing. Omitting the local 
and incidental causes for the failure of most of the 
profit sharing schemes, there is still this deeper eco- 
nomic and logical reason : the remedy is not co-exten- 
sive with the evil it is calculated to eliminate. For ex- 
ample, let us assume the existence of many successful 
profit sharing corporations — huge capital-labor trusts, 
each safeguarding the welfare of its own employees by 
liberal allowances for profits and high wages. There 
would then be a consumer s problem, due to the high 
cost of living necessary to support such combinations of 
capital and labor. Instead of a labor problem arising 
out of the condition of the wage-earners, we would 
have a consumers' problem because of the prohibitive 
prices imposed by the bakers" trust, the meat trust and 
the clothing trust. 

If we are to be at all successful we must secure some 
basis for the participation of the consumers — the all- 
embracing class — in the profits of our industrial system. 
In theory, this is altogether just and proper, since, by 
creating the demand, the consumers constitute the 
greatest factor in economic value. In practice, the only 
large co-operative schemes that have proven successful 
are those in which the benefits are distributed in pro- 
portion to the consumption. The well-known co-oper- 
ative stores in Great Britain, France and Belgium, 
sharing their profits in the shape of rebates (or divi- 
dends) on the amount and value of the purchases, have 
been far more successful than any schemes for co-oper- 
ative manufacture. In the latter case, co-operation is 
always a difficult matter because of the manifold prob- 
lems of efficiency, trade regulation and the struggle for 
world markets. 



166 THE SOCIAL COMMONWEALTH. 

In fact, we may draw the general conclusion that co- 
operation is successful when it is all-inclusive in its 
membership, and generally fails when it attempts re- 
striction and monopolization. As a further illustration 
of the truth of this conclusion, we have the successful 
efforts of co-operation among farmers in the distribu- 
tion of their products — particularly worthy of notice is 
the co-operation in the sale of dairy products of the 
farmers of Denmark. The farmers share in propor- 
tion to the value of the products that each brings to 
the co-operative sales-agency, while they retain the 
rewards due to< personal skill, labor and industry. We 
here have a successful co-operative business in the dis- 
tribution of products, which, in its nature, is all in- 
clusive. 

Profit sharing schemes, therefore, to be permanently 
successful, must be all-inclusive and not confined merely 
to the laborers of a particular industry. It is only just 
and proper that the profits should bring appropriate* 
benefits to the laborers in all industries, since other- 
wise the profits for the laborers in any particular busi- 
ness would depend on the success or failure of that spe- 
cial industry. Many laborers would suffer for the 
mistakes of their overseers, and others would profit 
inequitably because of the skill of their leaders or the 
demands of the public. Indeed, the}^ might often profit 
unjustly through the power of their monopoly — by 
compelling consumers to pay high and unfair prices. 

Industrial organization from the point of view of 
consumers should, therefore, be the basis of the activi- 
ties of Municipal Corporations and the Industrial Com- 
monwealth. In fact, both institutions harmonize with 
each other when each is viewed as an association of 



THE INDUSTRIAL COMMONWEALTH 167 

consumers, and together they may be conceived as in- 
tegral parts of a large Consumers' League. 

To-day, we have a condition in which industrial 
activity is directed by the propelling force of profits, 
and consumers are considered only from that point of 
view. The organization of an "Industrial Common- 
wealth," the main feature of which will be considera- 
tion for those who create the demand for products, will 
introduce a new factor in industry. As in the case of 
the labor colonies, we shall permit this Industrial Com- 
monwealth to compete with present-day industrialism 
for the purpose of uplifting the economic life of the 
nation. The Labor Commonwealth would establish 
a minimum wage below which the industrial struggle 
would not be permitted to sink; the Industrial Com- 
monwealth would fix a maximum price for all products 
necessary to the welfare of the people. Whenever the 
captains of industry should attempt to extort an unrea- 
sonable profit, they would have to face the competition 
of Municipal Corporations and the Industrial Common- 
wealth. 

We have no right to draw a strict line of demarcation 
between public and private activities, between the work 
that may be undertaken by the Industrial Common- 
wealth and by private citizens. It is sufficient for us 
to find a path for progress in economic life — and leave 
for succeeding generations the task of determining the 
ever-changing line between co-operative action and 
individual initiative. The Industrial Commonwealth 
would undertake those activities which might prove 
more profitable through co-operative efforts than 
through individual initiative. How far to develop its 
activities is a question purely of economic value to the 
consumers — a matter involving the business considera- 



168 THE SOCIAL COMMONWEALTH. 

tion of profit and loss. For the present, it is important 
to have indicated the machinery — Municipal Corpora- 
tions and the Industrial Commonwealth — which may 
be utilized for economic progress in the present and the 
future. The Industrial Commonwealth would not be- 
come a Socialist monopoly to the exclusion of indi- 
vidual initiative, but merely a collective enterprise for 
co-operative distribution, and for protection of con- 
sumers, in competition with the efforts of private citi- 
zens in industrial life. 

Since the Industrial Commonwealth would have no 
power of taxation (like the state), it would naturally 
be conservative in its business activity and would under- 
take various enterprises only when there would be rea- 
sonable grounds for the expectation of profits. It 
could not afford to enter a field of activity with the fond 
belief that the people would be taxed to pay for deficits 
incurred. 

In order to secure efficient management of the con- 
sumers' league of city and nation, it might be advisable 
to offer to the directors of each organization a small 
share of the profits. This is no radical suggestion but 
a practice with which we are familiar to-day. In every 
case of bankruptcy, the receiver who is appointed by 
the court to wind up the business and distribute the 
shares among the creditors is paid a certain percentage 
on all receipts and disbursements. Ordinarily, this is a 
simple function, involving little discretion, and the 
posts serve as tempting "plums" for friends of the 
Bench. But in the City of New York, during the last 
few years, we have had an important modification of 
such a theory in the commendable activity of the re- 
ceivers of the Metropolitan Street Railways. The street 
cars were kept in a state of high efficiency, and, as "go- 



THE INDUSTRIAL COMMONWEALTH 169 

ing concerns," have paid off some large debts which 
a band of financial pirates fastened upon the property. 
In other words, the profit-sharing receiver has been able 
to achieve results that our astute but unscrupulous 
financial magnates have never been able to surpass. 

Accordingly, the members of the commission of each 
Municipal Corporation (exclusive of the mayor, who is 
to be regarded as the special representative of the peo- 
ple) and the members of the Board of Directors of 
the Industrial Commonwealth (except the three mem- 
bers representing the United States government, i. e. 
the Vice-President, the Secretary of Agriculture and 
the Secretary of Commerce) should receive some in- 
terest in the net profits of their respective corporations. 
A small per cent of the net profits of each Municipal 
Corporation and of the Industrial Commonwealth, if 
divided among the members of the Board of Directors 
of ieach corporation as a profit-sharing plan over and 
above a certain fixed salary, would be sufficient to en- 
courage careful and scientific management. The gov- 
ernment officials, representing city and nation, should 
receive no profit above the salaries provided for by the 
public. They would serve as representatives of the 
people — as tribunes — rather than as managers of indus- 
tries, and, as such, they could check any abnormal 
struggle for profits that might prove detrimental to the 
public welfare. 

The Industrial Commonwealth and Municipal Cor- 
porations will be institutions essential for the protec- 
tion of consumers. The goal will not be merely money 
profits, but the benefit, advantage and profit of the 
consumers of the nation. It will undertake those ac- 
tivities which would be profitable to the general popu- 
lation — and this may not always imply large money 



170 THE SOCIAL COMMONWEALTH, 

gains, but rather incidental benefits to the people. 
(Thus, the government Post Office has adopted the sys- 
tem of rural free delivery not because it offers a pros- 
pect of monetary returns, but because it makes the life 
of the farmer more pleasant). Even so, the Industrial 
Commonwealth will be not a grasping Leviathan, bent 
upon profit, but rather an instrument to "provide for 
the common defense" — in protecting the citizen body 
from the exactions of trusts and corporations — and "to 
promote the general welfare." 

Without attempting to map out a program for future 
social development, we may, nevertheless, conclude that 
the Industrial Commonwealth will become the potent 
factor in the solution of the "Trust Problem." Just as 
the Labor Commonwealth, carefully managed, »will be- 
come an institution that will solve our "Labor Prob- 
lem," even so will the Industrial Commonwealth be- 
come the instrument for regulating and controlling 
large aggregations of capital. Furthermore, instead of 
labor legislation on the one hand and Commerce Com- 
missions on the other, interspersed by ineffective gov- 
ernment investigations and expensive legal campaigns 
in "trust busting," we shall have two complementary 
institutions — the Labor Commonwealth and the Indus- 
trial Commonwealth — which will automatically regu- 
late our economic svstem. 



CHAPTER XL 

A Social Program and a Political Platform. 

i — Social-Political Reforms. 

To achieve the ideals of the Social Commonwealth, 
a few preliminary reforms are necessary, which, 
while they can be obtained only through political action, 
bear directly on economic life. These reforms are inti- 
mately connected and may be classified as the three 
great freedoms of life: (A) Mental freedom — or the 
freedom of intellectual activity; (B) Physical freedom 
— or the freedom of action by a healthy body; and, 
^C) Moral freedom — or the freedom of conduct, 
properly regulated by law. 

(A) Mental Freedom. 

The first, or mental freedom, we are rapidly 
achieving. Let it be understood that by such freedom 
of mind we do not mean simply the freedom of speech 
and press, but also the opportunity for obtaining such 
mental development as to make possible an intellectual 
life. In short, it implies an equal opportunity for 
education to all. Some of our Western States 
have already attained this ideal, where a citizen 
may obtain free education in the State University in 
every field of human thought and action. The Univer- 
sity of Wisconsin has gone one step further, and, 
instead of passively awaiting the entrance of students 
within its halls, it is actually carrying its knowledge to 
the door of the farmer and the artisan by arranging 
for numerous lectures and courses of practical educa- 
tion throughout the state. 

The Social Commonwealth must be accompanied by 



172 THE SOCIAL COMMONWEALTH. 

free education in every field of knowledge, in vocational 
and professional training as well as in academic courses 
in the University. No one should be compelled to pay 
as an apprentice for learning the difficult problems of 
the lawyer, doctor and engineer. On the contrary, 
education in every field should be regarded only as 
opportunities for future usefulness, and if we are to 
maintain democratic institutions we should extend such 
opportunities so that all may partake of them on an 
equal basis. In short, the State University should 
offer courses in every field of knowledge, free of 
tuition fees, to all of its citizens. Only by opening the 
door of intellectual activity to all Americans can we\ 
secure true mental freedom. 

(B) Physical Freedom. 

Our states have made half-hearted attempts toward? 
securing for the individual citizen the physical freedom 
indispensable to a useful life. They have established 
Bureaus of Health that are valuable for protecting us 
from contagious diseases and for teaching us the 
importance of sanitation. But we still suffer from the 
negative view of state activity. Nowhere do we find 
a comprehensive plan for developing physical stamina 
and health power in our population. We are very 
effective patchworkers, for we are efficient in stamping 
out a contagious disease and limiting the ravages 
caused by negligence and stupidity, but we have not 
yet learned the value of an "ounce of prevention/' 

Here and there we now discern the growth of a new 
health movement — as a reflection of our political insur- 
gency. In several cities there is a strong "social recre- 
ation'' movement, supported by those who believe that 
the state owes a duty to its citizens to make the whole 
population physically free as well as mentally inde- 



\ SOCIAL PROGRAM 173 

:. The program has not yet been made definite, 

f its vague demands is that the school house 

not only for a few hours during the day as 

oms for children, but also as social settlements 

with club rooms, lecture halls and gymnasiums for 

parents and adults. 

state should endeavor to make the doctor as 
Ful a p servant as the public school teacher. 

Instead of isolated Health Boards to guard us from 
, scarlet fever and other unusual epidemics, we 
- on witness the development of a comprehensive 
Lte Health Bureau equal, in importance, to the State 
iversity. Both will be absolutely free to all citizens. 
ne will be compelled to pay for medicines and text- 
for educational lectures and prescriptions oi 
physiciai . In short, the doctor will be made the 
adjunct to the State Health Board. A simple regula- 
tion would convert our modern system, in which sick- 
ness and disease constitute the chief asset of physicians, 
into a sane method for public health. The state should 
ue licenses for the practice of medicine only to those 
who agree to devote part of their time as "public" doc- 
tors, when called upon by the State Board of Health. 
The state might arrange for the payment of from one 
thousand to three thousand dollars per annum, in 
•rdance with the length of service, to physicians and 
dentists who would be required to devote four hours 
each day in the free hospitals managed by the State 
rd of Health. Such hospitals, dispensaries and 
gymnasiums would, in that case, be regarded not as 
trity, but as part and parcel of the Health Depart- 
ment of the State, even as the schools and colleges 
would be essential parts of the State University. 

The State can offer no valid objection to those 



174 THE SOCIAL COMMONWEALTH. 

desiring private medical attendance over and above 
that which is provided by the Health Department. The 
rich now enjoy the luxury of private schools and well 
paid tutors, and we ought not to deprive them of the 
privilege of paying fancy prices for the attendance of 
private physicians. Yet. inasmuch as we are now 
rapidly making education free and universal, so our 
next step should be to make good health accessible to 
every citizen by throwing wide open the doors of 
^gymnasiums and hospitals, and placing the whole 
population under the care of physicians, dentists and 
physical trainers to be paid by the State. 

(C) Moral Freedom. 

Finally, the necessary complement to mental and 
physical freedom is moral freedom — the liberty of con- 
duct under just laws. Today, our morality is under- 
mined by the spectacle of justice purchased — not in the 
market place, but in the offices of well-paid lawyers. 
We are not making any charges against the honored 
profession that has given to the world so many leaders 
of thought and action. Too many lawyers have become 
Presidents, Governors, famous Judges and Legislators 
to justify indiscriminate condemnation of the profes- 
sion. We should level our criticism rather at a system 
of legal procedure that makes us pay for justice. 

In the early days of legal development the judges 
received payment from the contestants, so that the van- 
quished party bore a heavy burden in receiving justice. 
In criminal proceedings, the judges were paid by fines 
imposed on the wrongdoers, and, in order to secure 
reasonable compensation, it was incumbent on the judge 
to discover sufficient wrongdoers. 

To-day, we have advanced to the point where the 
judge and his clerks are the paid servants of the state, 



A SOCIAL PROGRAM 175 

bul the lawyer (who, in the view of the law, is an 
officer of the court) still remains the hireling of private 
interests. By a legal fiction, the lawyer owes his first 
duty to the slate and its courts, of which he is an 
important •official, but in actual practice, he must feel 
a far more serious obligation towards those who pay 
fees and advance his material interests. It is high 
time that we make of the lawyer an official of the state. 

['act as well as in theory, and that the "counselor" 
should become more than a mere adviser of private 
rlients, that he should develop into an actual assistant 

the presiding justice. 

This would be in harmony with the progress of 
legal history for many generations. Centuries ago, the 
Teuton and the Anglo-Saxon had no concept of aim- 
inal law, and any wrong done to an individual, even 
though it were murder, was not a matter of public 

icern, but a mere private wrong to be avenged by 
the friends of the injured party. (The feuds of Ken- 
lucky and the Vendetta of Italy and Corsica are exam- 
ples of criminal law privately managed and effectually 
applied.) To-day, we have extended our criminal law 
so that it includes many acts that are w r rongs against 
individuals, like forgery, theft and criminal assault, but 
they are of such importance that they affect the public 
welfare. We, therefore, classify them as crimes, ro be 
sharply distinguished from ordinary civil suits, that 
embrace merely wrongs against individuals and dis- 
putes between citizens over property rights. With the 
progress of civilization, the number of crimes increase 
— so that it is sometimes said that civilization makes 
new crimes until every important wrong against an 
individual becomes a wrong against society, or a crime. 
We would take an important step in moral progress, if 



176 THE SOCIAL COMMONWEALTH. 

the state were to interfere on behalf of its citizens in 

civil as well as criminal cases. 

We should abolish the private fees of trial lawyers, 
even as we have outgrown the practice of former times, 
when the Court appropriated the fines imposed on 
criminals. 

The reader may contend that a lawyer without fees 
is impossible and unthinkable. To refute such a 
charge, it is necessary only to call to mind the numerous 
cases in which lawyers are assigned to defend men 
charged with crimes, for which service the attorneys 
receive little, if any, compensation. Furthermore, we 
have a state Attorney-General and his assistants, and 
the District Attorneys in the various counties, who 
represent the people against criminals. These prosecu- 
tors and their assistants are the paid servants of the 
State. Since they receive their salaries from the public 
treasury, there can be no objection if they were to 
undertake not only the cases of the people against 
criminals but also the claims of each individual citizen 
in his disputes with his fellowmen. In short, the Dis- 
trict Attorney should be converted into a Plaintiff 
Attorney, before whom any resident of that particular 
county, having a grievance against some other citizen, 
might apply for the institution of a suit at law. Of 
course, the staff of each District Attorney would have 
to< be vastly increased to manage the numerous duties 
of the civil law, but this would not require any radical 
changes in the management of the force. (The District 
Attorney of New York County to-day has more difficult 
tasks and more actual court trials than all the law cases, 
civil and criminal, in the vast majority of counties 
throughout the Union.) 

As the District Attorney would be the general attor- 



A SOCIAL PROGRAM 177 

ney for Plaintiffs, even so we might have one Defend- 
ant Attorney, who might be appointed by the highest 
:ourt in each judicial district into which the state is 
divided. The Defendant Attorney would maintain an 
office with assistants, analogous to the office of the 
District Attorney, but as the latter would be an official 
elected by the people, so the Defendant Attorney 
might be an officer appointed by the Court for the pro- 
tection of persons sued.* Of course, the staff of attor- 
neys that would be employed in public service would 
be greatly enlarged, but the field is so crowded to-day 
that good talent can easily be procured, by civil service 
regulations, for reasonable compensation. 

In the legal procedure of England, a valuable dis- 
tinction is made between barristers and solicitors. The 
former are the actual trial attorneys, who appear in 
court and conduct litigation, while the latter attend to 
conveyances and offer legal advice. It is important for 
us to preserve this distinction. We have no right to 
restrict any citizen — lawyer, engineer or business man- 
ager — from offering advice and receiving compensa- 
tion for suggestions of law or business. No restrictions 
should be placed upon the practice of private lawyers, 
not employed by the state, except in the actual trial of 
cases in court. For the latter work — the task of the 
barrister — we must have public servants, responsible to 
the people and their courts. 



* The State of New York is divided into four judicial depart- 
ments with an Appellate Division of the Supreme Court as the 
Appellate Court for each department. The Legislature might 
authorize the Appellate Division in each department to appoint, 
for a term of four years, a Defendant Attorney in each 
judicial district. In other states, similar judicial districts, divi- 
sions or departments would serve as the basis for the choice of 
one general Defendant Attorney to protect the citizens from 
suits brought by the District Attorney. 



178 THE SOCIAL COMMONWEALTH. 

In matters of advice to clients, the private lawyer can 
practice even as the private doctor or teacher. But in 
order to preserve the atmosphere of impartiality in our 
trial courts (often lacking to-day), it seems to us essen- 
tial that only public lawyers be permitted to engage in 
trial work. Instead of legal aid societies that operate 
as charitable organizations, zve would have public offi- 
cials charged with the duty of protecting all citizens 
from wrongs, whether civil or criminal. This will give 
its moral freedom fortified by unpurchaseable justice. 

This is' not the place for an extended discussion of 
the suggestions now offered. We may conclude, how- 
ever, that freedom in the domains of intellect, health 
and morals are the necessary concomitants of the Social 
Commonwealth. 

2 — Social Insurgency. 

The progressives, whether they be Insurgent Repub- 
licans, radical Democrats or members of third parties, 
are preparing the ground for the planting of a Social 
Commonwealth on American soil. They are the enter- 
ing wedge for the introduction of a better and nobler 
social system. They have faced, unflinchingly, the 
problem of state interference and have answered boldly 
that the city, state and nation have the right, and owe 
the duty, of undertaking any enterprise which can be 
profitably performed by the public service, consistent 
with constitutional limitations, irrespective of the theo- 
retical considerations of Laissez-faire and Socialism. If 
my service can be rendered more efficiently by the city 
and the state than by private enterprise, then, they tell 
us, it is incumbent on the city and state to engage in 
such activity within the limits prescribed by the organic 
law. 



A SOCIAL PROGRAM 179 

Perhaps the most serious difficulty is the lack of 
agreement among progressives as to the specific rem- 
edies to be applied. All agree that if we are to secure 
and maintain industrial liberty we must make our eco- 
nomic system subject to the sovereign power of the 
, state. We dare not permit the upbuilding of independ- 
ent capitalistic kingdoms within the state and nation. 
The steel kings, the oil princes and the sugar barons 
will not be undisturbed in a domain that will constitute 
"a state within the political state." Forward-looking 
men have concluded that all private enterprise, how- 
ever beneficent be the financial magnates that control 
it, must be subject to the sovereign power of the state 
and nation. 

But how should that sovereign power be practical 1\ 
applied ? The new Progressive Party answers — Regu- 
lation. Do not exterminate trusts, do not prosecute 
large business merely because it is large, but regulate 
all business for the protection of all the people. Such 
a program requires the appointment of commissions 
for investigation and regulation, analogous to the Inter- 
state Commerce Commission for the supervision of 
interstate railroads. Carried to its logical extent, it 
would mean the fixing, by lazv, of minimum wage 
scales in the various industries and maximum prices 
for the products. 

This program is opposed by those radicals within the 
Democratic Party who hope to bring about better indus- 
trial conditions by the time honored methods of de- 
stroying monopoly. They hold to the yiew that a 
private monopoly is indefensible, no matter how regu- 
lated or controlled. They believe, generally, that we 
have reached the condition of diminishing returns in 
our efforts at concentration and large scale production. 



180 THE SOCIAL COMMONWEALTH. 

They tell us that we have multiplied large plants until 
competition is supplanted by monopoly because "it 
does not pay" to compete. Accordingly, their program 
includes a ceaseless war on private monopoly to the end 
that true competitive conditions may be restored. They 
believe with the old Economists that under a system of 
free and untramelled competition wages, prices and fair 
conditions will be secured automatically. 

Both camps of progressives, therefore, believe in 
the sovereignty of the people as expressed through 
their political power, the government. But while 
Insurgent Republicans and the Progressives, as 
a political party, believe in active government regu- 
lation and control of our industrial system, the radical 
Democrats advocate, first, the enforcement of anti-trust 
laws and the restoration of competitive conditions, and 
then a moderate regulation of industry, far removed 
from extensive state interference that is so distasteful 
to the followers of Jefferson and Jackson. 

We are not concerned with a careful analysis as to 
which of these progressive views is the correct one. 
Both strive for a condition of industrial liberty. It 
may be that both are viewing economic conditions from 
a different angle, and the true solution will involve an 
acceptance of the essence of both programs. The Pro- 
gressives and Insurgent Republicans are right in their 
contention that the sovereign power of the state must 
provide against conditions that would make life un- 
worthy of a free citizen of a great republic. But active 
government interference, to mitigate the hardships of 
the ruthless competition in industry and labor, must 
have a logical basis. 

Instead of inharmonious laws and ordinances, 
we should create an institution for the abolition 



\ SOCIAL PROGRAM 181 

of povert) we must establish the Labor Common 
wealth that will fix a minimum below which the 
struggle for existence will not be permitted to fall. 
i laving secured such a minimum standard, however, it 
is incumbent on us to evolve the Industrial Common- 
wealth which will operate to uplift our whole social 
system. This must be an organization not directly 
affiliated with politics — - if we are to conduct a 
free industrial society. If such an institution is 
to remain efficient and serviceable, it must be a 
free agent that will face the competition of private 
enterprise and individual initiative. Endorsing the 
formula of radical Democrats that a private monopoly 
is indefensible, the Industrial Commonwealth will 
undertake the control of those industries that are mon- 
opolies by nature and by social demands. But in all 
the diverse activities of modern industrialism it will 
enter on the true basis of competition. By its activi- 
ties it will, automatically, force a regulation of the 
modern competitive system. Our Industrial Common- 
wealth will be ever watchful of the interests of con- 
sumers in city, state and nation. By its healthful com- 
petition to raise the plane of industry, it will render 
unnecessary an extensive use of state interference by 
ernment commissions and restrictive legislation. 

In short, the Labor Commonwealth and the Indus- 
trial Commonwealth will constitute the Social Com- 
monwealth of America. It will set a minimum wage 
for labor, and automatically fix a maximum price for 
commodities, which will "reduce the cost of living." 

Our industrial life is confronted with momentous 
changes. Progressives advocate minimum wage stand- 
ards, social insurance, workingmen's compensation acts, 
etc. For every old evil they present a new and distinct 



182 THE SOCIAL COMMONWEALTH, 

remedy. The just criticism that may be leveled against 
the new Progressive Party is that, while it is animated 
by a worthy desire for improving conditions of the 
masses of our countrymen, it presents no consistent 
program. It is high time that we fashion some instru- 
ment to unite these diverse reforms into a reasonable 
program for the achievement of social justice. Life is 
more than a series of sensations and ideas, and indus- 
trial activity is more than a hodge-podge of good busi- 
ness and bad business. We should not be satisfied by 
patchwork reforms and ill-considered remedies. To 
correlate the numerous plans for reform that have been 
suggested is the most important work before the leaders 
of that party. The Social Commonwealth, organized 
for the protection of the wage-earner and consumer, 
would establish, automatically, a minimum wage and 
maximum price, and would serve as the connecting 
link between the aspirations of the Progressives and 
the achievements of valuable concrete results. 

The radical Democrats are solicitous for a state of 
free and unhampered competition. The Social Com- 
monwealth will set a fair standard of competition that 
will safeguard our economic system. The Insurgent 
Republicans believe in "progress with sanity." Our 
program fills the bill. Uniting the progressives of all 
parties under its banner it will wage an effective war 
against the safe, sane, conservative "standpatters" that 
are ever ready to block progress. It will compel them 
to* "step lively" in the path leading to industrial liberty. 

Our program might be called Evolutionary Social- 
ism', or may be designated by that other vague symbol, 
experimental Socialism, and, with one important modi- 
fication, we may accept these terms as descriptive of our 
Commonwealth. That one modification, however, is the 



A SOCIAL PROGRAM 183 

cardinal difference between Socialism and the Social 
Commonwealth. The ideal of Socialism is complete 
ownership of all social productive agents and absolute 
co-operation in production. All the acts and projects 
of Socialist leaders have this end as the ultimate ob- 
ject to be secured. But they fail to see that there are 
many activities (as agriculture and manufacture) in 
which monopolization is not essential for success and 
the maximum of profit. We, therefore, lay down the 
general principle that the activities of our Social Com- 
monwealth should be not to the exclusion of, but in 
competition with, individual initiative. The operations 
of the Industrial Commonwealth might give us a 
public monopoly in a particular industry, but it will 
then be a monopoly of the survival of the fittest. 
Furthermore, the profits of such a monopoly will not 
be the private funds of clever manipulators, but will 
be shared by all consumers. On the other hand, if 
competition persists in spite of the activities of our 
Industrial Commonwealth, we shall not attempt to 
crush it, in Socialist fashion, but permit it equality of 
opportunity in growing by the side of our public efforts 
as long as it can sustain itself. 

Socialism offers us a coercive society in politics and 
economics, since the government or the state would be 
in supreme control of political and industrial life- 
philosophic anarcliism holds out the prospect of a free 
society in politics and economics, constructed on a sys- 
tem of voluntary co-operation, lacking the cohesive 
power of leadership and obedience, 'flic Social Com- 

ual le eh men is in both of 
these pi serving the coercive power of the 

state, when absolutely indispensable for (he preservation 



184 THE SOCIAL COMMONWEALTH. 

of life and fair play, it depends on the growth of a 
large voluntary association for the economic freedom of 
the people. 

3 — A True Common-Wealth. 

The reader will have searched in vain in the fore- 
going discussion of the Social Commonwealth for 
some panacea for all social problems, a cure-all for so- 
cial ills. The endeavor has been, rather, to present 
the path that effective reform must take. Our pro- 
gram will begin with the municipalization of land 
values and the municipal management of public utili- 
ties and the organization of an effective co-operative 
selling agency for the products of farmers. The Mu- 
nicipal Corporations and the Industrial Commonwealth 
will gradually undertake activities for supplying press- 
ing social needs (the milk supply, bakeries, etc.) ; and, 
in competition with individual initiative, they will oper- 
ate to raise the plane of industrial life. We place no limit 
to the field of work which the future may offer. We 
shall experiment, and each period will be its own judge 
of the proper limits for the activities of these public 
corporations. In short, instead of a temporary ex- 
pedient to alleviate suffering or remove present-day 
ills, we have brought forth an institution, capable of 
responding to the needs of each age. We are finding 
a new pathway of progress, and the Social Common- 
wealth is a method for evolving industrial democ- 
racy as fast as the world is ready to receive it. 

During the last decade, we have noticed the marvel- 
ous growth of the spirit of revolt against industrial des- 
potism and the invidious alliance between frenzied fi- 
nance and corrupt politics. The leaders in this revo- 
lution were called insurgents, and, in the beginning, 



A SOCIAL PROGRAM 185 

they were regarded as a minority faction of the Repub 
lican Party. But to the dismay of the ''standpatters," 

this disease of unrest spread rapidly to the Democratic 
Party, until Governors, Senators and party leaders of 
both the old political organizations were competing 
with each other in proclaiming the heresies of social 
reform. Since the movement has become popular, the 
word "progressive" has been substituted for "insur- 
gent." A new political party has been created with 
progressive principles as its special province. To such 
progressives (be they Insurgent Republicans, radical 
Democrats or members of third parties) our appeal 
must be presented. Hitherto, progressives have been 
the faction of destruction, rendering valuable service in 
striking down old abuses. The work w T as, and still is, 
important and necessary, but it consisted largely of 
political efforts in remedying grave social ills. 

The time for constructive work has now come, and 
the results cannot be achieved by political restrictions 
and minute legislative regulations, for such methods are 
useful in eliminating old wrongs but not in rearing 
new social rights. For the work of social readjust- 
ment we must employ the methods of economics. 
As every firm structure must rest on a solid 
foundation which can be secured only by exca- 
vation, even so must the Social Commonwealth rest 
on the strong basis of political morality secured by the 
elimination of special privilege. The insurgents rind 
progressives have created the transition period in Amer- 
ican history of the twentieth Century — a change from a 
commercialized Republic, with an eye for the "main 
chance" in money making, to a Democracy of economic 
and political liberty. Whatever be the shortcomings of 
the leaders of the progressive and insurgent movement, 



186 THE SOCIAL COMMONWEALTH, 

there is no doubt that these men and their sturdy fol- 
lowers deserve credit for introducing a new period in 
American history. Bryan, the preacher of insurgent 
faith ; Roosevelt, the statesman of progressive politics ; 
La Follette, the expositor of insurgent principles; and 
Woodrow Wilson, the scholar of progressive reforms 
■ — these are the great figures in the opening of the So- 
cial Era of American History. 

The social program* of our political insurgents and 
progressives has not yet been formulated. But we now 
have the material that may be of large value in shaping 
such a political platform, incorporating a comprehen- 
sive social program. In Western Europe, where the 
Socialist party is the usual medium for liberal ideas, our 
program would appeal to the Evolutionary Socialism 
of France and Germany. In England, the virile Labor 
Party would find this social program in harmony with 
the best hopes of its leaders. In America, however, 
where attempts at social reform have been least suc- 
cessful for many years, our plans would have the best 
opportunity for practical realization. For the Social 
Commonwealth would appeal not to any single political 
party but to Progressives, radical Democrats and Insur- 
gent Republicans. The acceptance of our ideal by any 
of these factions would force its endorsement by all im- 
portant political parties. By obtaining the support of 
progressives of all parties we would secure results, in- 
directly, far more significant than the victories of any 
new political organization. 

The Industrial Commonwealth can do a mighty 
work. With a view of constantly benefiting its members, 
it can — and if our government is to remain free from 
the taint of plutocracy, it must — automatically regulate 
the private corporations fostered by financial magnates, 



A SOCIAL PROGRAM 187 

while the Labor Commonwealth will place a limit be- 
low which the competitive struggle will not be tolerated. 
The Social Comntionwealth will then prove to be a 
valuable co-operative institution, fostered by the people 
and their political agents, as a necessary and salutary 
limitation on competition and as the bulwark of indus- 

al democracy. 

We, Americans, are to-day face to face with an old 
danger — Class Rule. It is the perilous rock upon 
which many a ship of state has been wrecked. In the 
olden days, Athens was great and powerful; Athens 
was noble and beautiful. She has been at all times the 
pride of the political philosopher. Yet the entire Ath- 
enian political and industrial system rested on slavery. 
The wonderful development of the minority of her 
inhabitants was made possible by the enslavement of 
the majority. While Plato and his pupils were strol- 
ling through the beautiful gardens of the Academy, 
discussing philosophy, while the Athenian citizens filled 
the jury seats and the legislative halls, while her orators 
and her statesmen, her poets and her historians, her 
artists and her philosophers were creating works that 
e made their names immortal, at that very time, the 
great mass of the inhabitants of Athens were toiling 
in the fields or drudging in the shops, practically de- 
prived of political rights and educational advantages — 
dragging out a weary and monotonous existence, which 
was illumined neither by the science, nor the philosophy, 
nor the poetry that have made the name of Athens a 
synonym for culture. Enlightenment, like a parasite, 
thrived on the sap of the tree of slavery. 

Rome, in her early life, was the "Queen City'' of 
many conquered peoples ; and, later in her history, when 
the rights of citizenship were extended, the whole 



188 THE SOCIAL COMMONWEALTH, 

fabric of her political system rested on slavery. Whether 
it was ancient Greece or Rome, Feudal Europe or the 
brilliant but despotic France of Louis XIV., each one 
of these states rested with all its immense weight on 
the poor peastantry that supported it. Such govern- 
ments were rather powerful squeezing machines, used 
by the ruling classes to press out the very life-blood of 
their subjects. And the history of these nations has 
made it plain that an institution which depends for its 
existence upon the development and enlightenment of 
one class of men at the expense of the degradation and 
oppression of their fellow-brethren is essentially im- 
moral, and, as such, cannot be permanent. 

No part of a community can be degraded without 
lowering the standard of the whole community. Only 
together can we rise from the depths of barbarism: to 
the glorious heights of enlightenment. If our institu- 
tions are to endure, not any particular class but the 
whole mass of our countrymen must climb every up- 
ward step of civilization. 

The fathers who laid the foundations, and their sons 
who built the superstructure, of the American Repub- 
lic held ever in view the elevation of the whole mass of 
our people. Under Lincoln, our Republic sacrificed 
almost one million of her noblest sons, so that four 
million negro slaves might be freemen. To-day, we 
are in the midst of another struggle for freedom — a 
struggle not less important because it is conducted 
without the clash of arms. Our generation will decide 
this contest not by the battles of patriot soldiers, but 
by the ballots of true-hearted citizens of our Dem- 
ocracy. And the question at issue to-day is not the 
slavery of the negro, but the slavery of white and 
black, of the workingman and the farmer, of the wage- 



A SOCIAL PROGRAM 189 

earner and small producer, who are forced to pay trib- 
ute to their taskmasters — the trusts, capitalistic com- 
binations, and the minions of special privilege, often 
guaranteed in their rights and protected in their "vested 
interests" by the laws of dead generations. 

America has reached the critical point in her history. 
We are at the parting of the ways. On the one hand 
is the road of Class Rule and Plutocracy; it is the path 
leading to the goal that so many nations have reached 
— nations that are no more. The other is the path 
leading to the yet untrodden regions of pure Dem- 
ocracy. If we have no fear to proceed therein, we shall 
not stumble on the way, for the great Americans of the 
past will serve as so man5^ stars to give us light and 
to indicate the direction o<f our journey. 

Those of us who believe in a divine purpose surely 
must say: the will of God is to uplift, to enlighten, to 
ennoble all his children, since He loves them all. And 
in so far as we endeavor to< execute the will of the Lord, 
we dare not permit any class to dominate the great 
mass of our countrymen. Deriving our inspirations 
from the glorious past, w'e may look forward to that 
future day, when instead of classes and masses, of the 
rich and the poor, we shall have one happy people, free 
in their industrial life as well as in their political life. 
And if we courageously guide our ship of state 
safely past the hazardous rocks of Class Rule and Plu- 
tocracy, we may look forward with confidence to the 
day when w r e shall reach the long sought port of pure 
Democracy. 



